The Nigerian naira witnessed a significant decline, reaching an unprecedented low of N1,482 against the United States dollar at the official window on Tuesday. This drop followed the Monday closure at N1,348, prompting concerns from economic experts and private sector leaders about potential far-reaching consequences.
The FMDQ Securities Exchange, responsible for calculating exchange rates, revised its methodology on Monday, triggering a technical devaluation of the national currency, according to some experts. The Central Bank of Nigeria (CBN) responded by releasing a circular on financial market price transparency, cautioning authorized dealers against engaging in sharp practices and emphasizing the importance of ethical standards.
The circular stated that reporting inaccurate and misleading information on financial market transactions amounts to market manipulation, vowing that such practices would face sanctions.
Despite these efforts, the naira continued its downward trend, closing at N1,482.57 against the dollar on Tuesday, a 9.93% decline from the previous day. The parallel market, however, remained stable at N1,450/$ on Tuesday. On the cryptocurrency peer-to-peer market, the naira was trading for N1,439.5/$ on Binance’s P2P platform.
The Lagos Chamber of Commerce and Industry (LCCI) expressed concerns over the potential impact of the falling naira on businesses. LCCI President Gabriel Idahosa attributed the depreciation to currency speculators and warned that the situation could lead to more factory closures, job losses, and price hikes for commodities and services.
Dele Oye, President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), echoed these sentiments, stating that panic buying of dollars by those seeking to protect their funds from devaluation has worsened the currency crisis. He warned of the likelihood of more factory closures, disagreements, and litigation due to rising costs for businesses.
Femi Egbesola, President of the Small Business Owners Association of Nigeria, emphasized that the exchange rate situation is negatively impacting businesses, with many folding up or struggling to survive. He expressed disappointment in the lack of concrete actions by policymakers to address the challenges faced by businesses.
As the naira continues to face challenges, various stakeholders, including SMEs, are calling on the government to take decisive actions to stabilize the currency and create a conducive environment for businesses to thrive.
