Nigerians mourn as Naira exchange rate rises to N652 at the black market

By: Damian Okonkwo

There has been a wild outcry amongst Nigerian citizens across the internet over the weekend as the naira exchange rate to the US dollar rose to its highest point since 1966. The Naira exchange rate to the US dollar rose to N652 per dollar at the black market on Friday. This marks a decline by N32 compared to the exchange rate of N620 witnessed the previous week. Thus, Naira could be said to have lost 6.07% value last week alone.

Historians were quick to note that this has been the highest rate of the naira exchange against the US dollar since 1966. Others believe it equally marks the highest point so far after her independence in 1960. Naira's exchange rate has continuously depreciated from 1986 till the present moment, such that the youth of the country find it hard to believe that there was a time when the naira was more valuable against the US dollar for more than a decade counting from 1972 to 1985 before the story changed.

Judging by the existing records from 1972 up to 1983; Naira was more valuable than the dollar exchanging at N0.550 per dollar. And rising to N0.724 per dollar in 1983. However, the collapse ensued in 1986 when the US dollar overtook the Naira in value exchanging at N2.02 per dollar. The rate had continued rising since then to attain its climax in 2022 with the exchange rate skyrocketing to N652 at the black market last week's Friday. Analysts agree that the country has gone backward from 1986 and attained its climax in 2022.

The naira official exchange rate at the Investors and Exporters (I&E) window closed on Friday at N426.58/$1. This story was quite different at the black market where the exchange rate rose to N652 per dollar.

The country's forex supply depreciated by 62.45% to $144.03 million from the record of N383.59 million that was recorded last week's Tuesday.

Nigerian traders and other investors have continuously decried the situation, knowing fully that their investment in Naira has lost huge value in its buying power, thereby increasing the hardship within the country. As reported by the Nations newspaper, the popular Nigerian actress Mercy Aigbe-Adeoti has groaned over the recent increase in the Naira exchange rate. Expressing strong dissatisfaction over the impact it was going to have on the life of the average Nigerian.

Many factors have contributed to the high decline in the Naira exchange rate last week. First is the strong dollar strength due to their series of aggressive interest rate hikes by the Fed reserve. On the Nigerian side, the high indebtedness of the country and artificial scarcity of dollars created by the politicians, and actions of the CBN in cutting off the services of the Bureau de Change; have impacted the country's currency negatively. The country's balance of trade has depreciated significantly too, with their number of imports highly exceeding the exports.

Nigeria is on the brink of a total economic collapse if a decisive rescue is not offered to the economy within this the quickest possible time.