On Monday, Nigeria’s currency, the naira, experienced unprecedented declines on both the official and unofficial markets, while stocks witnessed their most significant one-day plunge in over a year.
This development coincides with the severe scarcity of dollars in Africa’s largest economy, despite assurances from the Governor of the country’s central bank, Olayemi Cardoso, that foreign exchange liquidity is gradually improving.
According to a Reuters report, the naira’s value plummeted to 1,712 naira per dollar in late trades on the official market, with a similar decline observed on the unofficial market.
Last Thursday’s data revealed a further acceleration in Nigeria’s inflation rate for January, reaching nearly 30% annually, primarily fueled by surging food prices.
On the stock exchange, Nigeria’s All-Share Index experienced its most substantial drop since October 2022, falling by 3.15% on Monday. This decline was attributed to drops in banking, consumer goods, and industrial shares.
In response to rising inflation, Governor Cardoso increased open market rates to attract investors to government bills, which had lost appeal compared to equities.
However, despite this effort, treasury rates still lag behind the benchmark policy rate, and the naira’s depreciation suggests that yields may need to rise further.
