Updated on December 20, 2023
On Tuesday, December 19, 2023, Nigeria’s naira witnessed an unprecedented drop, reaching a historic low of 1,248 against the dollar during mid-day trading. t opened at 927 naira on Tuesday. It later recovered to 845 naira. This decline underscores the currency’s volatility following the government’s decision to ease currency controls in June. Despite the recovery to 845 naira, the fluctuation aligns with challenges in the foreign exchange market, mirroring parallel market rates.
The currency sold at around 1,225 naira on the parallel market on Tuesday, while it was quoted at 1,002.50 naira on the one-month non-deliverable forwards market.
Amidst this, investors are showing increased optimism, leading Moody’s to upgrade Nigeria’s credit outlook to positive. President Bola Ahmed Tinubu’s economic reforms, initiated in May, include the removal of a fuel subsidy, contributing to a surge in inflation. In November, inflation soared to an 18-year high of 28.2% year-on-year, posing a threat to the savings of 40% of the population living in poverty, as reported by Business Day.
Checkout: Dollar to Naira Black Market Rate Today
The World Bank projects Nigeria’s economy to grow at an annual rate of 3.5% between 2023 and 2026, estimating a 0.5 percentage points higher growth due to the implemented reforms.
Nigeria faces a looming debt crisis, with projections indicating expenditure six times higher on debt servicing than critical sectors in the coming year. In 2022, debt service consumed a staggering 96% of government revenues. Seeking relief, Nigeria has approached the IMF and World Bank, arguing the current debt level is unsustainable.
President Tinubu’s government aims to rejuvenate the economy by attracting oil and gas investments. In December 2023, TotalEnergies and ExxonMobil expressed intentions to expand operations in Nigeria. However, challenges persist, including oil theft, which results in the loss of an additional 300,000 barrels of oil daily, as stated by a Nigerian politician. Reports reveal over 4,800 illegal connections to Nigeria’s national oil pipelines, compounding the issues faced by the military combating oil theft.
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