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The Nigerian naira dropped to a record low of 1,730 per U.S. dollar on the parallel market on Monday, February 20, 2024, falling 8.13% from 1,600 naira recorded last Friday. This plunge came as the Economic and Financial Crimes Commission (EFCC) raided and arrested over 50 illegal currency traders in Abuja amidst the naira's freefall.
Parallel Market in Crisis
On Monday, street traders quoted the naira's buying price at 1,700 per dollar and the selling price at 1,730, leaving a profit margin of just 30 naira. Customers are desperately seeking dollars, further weakening the battered naira.
At the official market on Friday, the naira had already depreciated 2.65% to 1,537.96, down from 1,498.25 per dollar the previous day. Intraday trading saw the naira hit highs of 1,631 and lows of 1,000 against the greenback.
EFCC Cracks Down on Abuja Black Market
With the naira in freefall, EFCC officers raided and arrested over 50 illegal Bureau De Change (BDC) operators in Abuja's Wuse Zone 4 on Monday. Operators said the crackdown targeted the rising exchange rates and currency instability. The EFCC is yet to officially comment on the operation.
Moving forward, further naira weakness seems inevitable without significant interventions. However, the EFCC crackdown signals authorities are increasingly determined to rein in illegal currency dealings contributing to the volatility. Tighter enforcement of regulations, alongside holistic economic reforms, will be required to stabilize Nigeria's currency crisis.
Tinubu has expressed concern over the Nigerian naira's falling value against the U.S. dollar during meetings with officials, acknowledging the worrying exchange rate rise. To tackle these forex challenges, he cited efforts like raising $11.1 billion in debt funding for the upcoming budget and curbing speculation in forex markets. There were also attempts to let the naira adjust freely to find convergence between different exchange rates.
However, critics argue progress on promised reforms has slowed, sparking public discontent amid persistent inflation and growing gaps between official and black market rates.
Forex Woes Worsen
Tinubu admitted worries about the naira's decline against the dollar while conferring with officials. This came as the parallel market hit new lows of 1,730 naira per dollar.
Planned Interventions
To ease forex liquidity constraints, Tinubu highlighted moves to raise $11.1 billion through debt issuance to finance the impending budget. Curbing speculation in forex markets was also mentioned. Efforts were made to freely float the naira to merge the multiple exchange rates.
Reform Delays Alleged
Despite assurances, critics claim delays in executing reforms. This has purportedly worsened inflation and exchange rate disparities. The lack of visible progress has allegedly fueled public frustration over the economy's direction.
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