Categories: Nigeria News

Naira crashes massively against dollar at black market

The Nigerian naira is experiencing a significant decline once again, as a highly anticipated $3 billion loan, intended to inject much-needed foreign exchange liquidity into the market, faces setbacks, causing alarm in the financial sector.

Following the announcement of the loan deal by the state-owned oil company, Nigerian National Petroleum Corporation (NNPC), the naira strengthened to N850 per USD from N910 per USD in street trading within a mere two days. However, the naira’s value plummeted to a new low of N920 per USD on Wednesday, August 29, as the loan deal showed signs of stalling.

Insiders with knowledge of the situation indicate that the loan deal has encountered difficulties due to investor hesitancy. The investors who were initially supposed to contribute to the syndicated loan have reportedly backed out, leaving only the African Export-Import (Afrexim) Bank as a potential participant. However, Afrexim Bank cannot solely provide the required funds, partly due to its substantial exposure to Nigeria.

“Afrexim Bank has too much exposure to Nigeria and has reached its single obligor limit & can’t do it alone,” a source familiar with the situation disclosed to BusinessDay. Another source highlighted that the Nigerian National Petroleum Corporation (NNPC) presents a significant risk, contributing to the reluctance of investors to engage in the deal.

While the loan deal remains in limbo, the Nigerian naira continues to face depreciation, raising concerns about the absence of a substantive governor at the Central Bank of Nigeria (CBN). Investors view the leadership vacuum at the CBN as a more pressing issue for the naira’s stability than the delayed $3 billion loan. They emphasize the need for a swift appointment of a CBN governor who can promptly outline a new foreign exchange management strategy, particularly following the market “liberalization” move made in June.

As the market runs out of patience, Nigeria’s external reserves remain stagnant, and the Central Bank’s dollar supply remains limited, contributing to the uncertainty surrounding the naira’s trajectory. The combination of a stalled loan deal and the lack of strong leadership at the CBN has created a challenging economic environment, prompting calls for swift action to restore stability and confidence in the currency.

James Ewaoche Amedu

Recent Posts

Latest update on fuel price hike, fuel scarcity for November 22nd, 2024

As Nigerians express their frustrations over the recent fuel price hikes by the Nigerian National…

26 mins ago

Full List of 80,000 delisted companies published by CAC

The Corporate Affairs Commission (CAC) has officially removed companies that failed to file their annual…

34 mins ago

Amended NDLEA Act: Senate approves life imprisonment for drug traffickers, rejects death penalty

The Senate on Thursday agreed with the House of Representatives' recommendation to replace the death…

56 mins ago

Monday Odigie steps down as Bendel Insurance coach

Monday Odigie, the coach of Bendel Insurance Football Club of Benin, has resigned from his…

2 hours ago

Lewandowski reflects on missed Manchester United transfer

Robert Lewandowski has reflected on the time he nearly joined Manchester United in 2012, only…

2 hours ago

Okoye reflects on Super Eagles return after two years

Maduka Okoye has reflected on his first appearance for the Super Eagles in two years.…

2 hours ago