Naira exchange rate hits all-time highest record at the black market at N615/$

The Naira exchange rate to the US dollar has attained a new all-time highest record in at the black market in 2022, with the exchange rate skyrocketing to N615 per dollar last week. The rapid increase in the exchange value came in after the Naira exchange rate at the exchange window rose to N424.88/$1 on Thursday 30th June 2022, marking the lowest record so far over a decade. This marks an over 1.2% decline in the Naira exchange rate against the US dollar compared to the previous exchange rate of $420.13/$ traded the previous week. Nonetheless, the black market exchange rate closed the week at N612/$ after hitting a record high of N615/$ within the week.

Notwithstanding this backdrop, the total amount of FX traded at the Foreign exchange market rose by 6.27% with a total value of $627.94 million exchanged last week compared to the previous record of $590.91 in the previous week.

It is often sad to imagine that despite Nigeria being the largest African oil-producing country, its leaders have not made anything out of this rich resource. While many economists expected Nigeria to take advantage of the rising cost of oil at the international market to improve its economy, the country had remained soaked with corruption to the extent that the head of the Nigerian Upstream Petroleum Regulatory Commission - Mr Gbenga Komolafe - reported last week that Nigeria lost a whopping $1 billion in revenue to crude oil theft in Q1 2022.

According to Gbenga, out of the 141 million barrels of oil produced during Q1 of 2022, only about 132 million was received at the export terminal. This means over nine million barrels of oil have been lost to theft, amounting to a total loss of $1 billion in government revenue within the Q1 of the year.

What is the major cause of the fall in Naira Value？

Nigerian currency (Naira) is currently passing through its worst exchange rates in history based largely on the massive decline in its export earnings coupled with an increasing dependency on the importation of virtually everything used within the country. This factor amongst others, has caused a rising FX demand in the country amidst low liquidity.

Another significant factor that has increased the Nigerian exchange rate, is the high record of the dollar index which attained a new high last week at 105.6. The dollar index measures the strength of the US dollar compared to other world currencies especially the six major economic powers and by extension other exotic currencies.

On a broader scope, the Naira Nigerian could be said to have fallen by 8.3% YoY after starting the year at N565 at the black market exchange rate and exchanging currently at N612/$.