- The naira hit an all-time low of N930 to a dollar on Thursday, August 10, 2023
- The demand for the dollar surged on the black market, sending the naira plunging to its lowest in history
- However, the Acting CBN governor, Folashodun Shonubi, revealed that illegal diaspora remittances and the black market operators are responsible for the naira crash
The Nigerian currency, the naira, has continued to plunge lower in the FX market.
On Thursday, August 10, 2023, the naira fell to its lowest in history, exchanging at N930 to a dollar as demand for the dollar by importers and other users surged.
Naira experiences worst fall in history
The non-intervention of the Central Bank of Nigeria worsens the situation.
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Dealers quoted as high as N930 to a dollar against the N910 quoted on Wednesday, August 9, 2023. The dealers continue to lament the scarcity of the US greenback.
Reports say the dealers revealed that they bought the dollar at N920 per dollar and resold at N930 to a dollar.
They said they buy at N920/$1 and then sell at N930/$1, leaving a profit margin of at least N10.
The naira has weakened by 18.7% since the beginning of August at the parallel market. The exchange rate weakened by 11.5% in the whole of July 2023.
The naira has depreciated by 11% in August alone, the biggest since Nigeria began the naira float.
Why the naira continues to fall, CBN explains
Meanwhile, the Central Bank of Nigeria (CBN), on Thursday, August 10, 2023, blamed the continued crash of the naira against the dollar on unofficial diaspora remittances.
According to the Acting CBN governor, Folashodun Shonubi, who spoke at the National Institute for Security Studies, Abuja, many diaspora remittances came into the country unofficially and documented but found their way to the black markets.
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“The challenge with the black market and the unofficial market is that it is not regulated and becomes an easy place to have criminal activities.
“Some of the black market funding is actually from diaspora remittances. That’s why we need to know what’s going on there. We can’t play the sentiment game. If we don’t understand the dynamics, we usually go with the literature, which does not necessarily work for us,” the top banker said.
CBN wants black regulated
The Acting CBN chief said that many countries have remittances as the primary dollar sources, stating that countries earn about $1.5 million in diaspora remittances.
He said there should be measures to control illegal remittances and identify the channels to ensure remittance flows into the proper channels to harness maximum benefits and grow the economy.
Daily Trust reports that Shonubi revealed that Nigeria had increased Diaspora remittances from the construction sector in 2021.
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“We talk about black markets, which also create their own problems. Management of the foreign exchange market and the efficacy of our policies to manage the exchange rate becomes difficult due to the insignificance of our diaspora remittances which are going to other markets.”
Traders blame Binance as naira crashes to N910 to a dollar, experiences worst performance under Tinubu
Legit.ng reported that the exchange rate between the naira and the dollar fell as low as N910 to a dollar on the black market.
Dealers quoted rates as high as N910 on Wednesday, August 9, 2023, as they continue to cite higher demands as the reason.
The Nigerian currency depreciated by 4.37% on the parallel market in the first week of August. The Exchange rate dropped by 11.5% in the whole of July 2023.