The naira continued to devalue against the dollar as it traded at N630 per dollar. However, the official market saw it trade at N430 to the dollar because of the persistent scarcity of the currency; resulting in a differential of N200.
Due to shortages of dollars and an increase in the number of Nigerians keeping it as a safe haven asset; the naira depreciated as a result of end-user demand pressure. Despite the fact that many worldwide currencies have declined in value versus the dollar, the naira; which is the largest economy in Africa and a key reserve currency, has fared the worst.
Although it is true that many worldwide currencies have declined in value against the dollar; the situation is worse for the naira because Africa’s largest economy and top oil producer continues to import petroleum products, distorting its export margins.
Nigeria’s economy, which is a genuine reflection of the naira, is in terrible shape. About 40% of Nigerians, or over 90 million people, live in extreme poverty. Food production is anticipated to decline due to fertilizer shortages caused by the Russian/Ukrainian war; Nigeria has also yet to fully recover from the devastating effects of Covid-19; the rising insecurity that has hampered agricultural activities is having a different impact on Nigeria’s food security; food inflation, according to NBS, stood at around 18%; and finally, food prices are expected to rise in the coming years.