Nigeria’s central bank has accused currency speculators of being behind the local currency’s recent slide to a new all-time low of N710 against the greenback. The leader of the Nigerian Association of Exchange Operators has insisted that crypto trading may be to blame for the recent fall in the value of the naira.
Nigerians converting to USD
According to local reports, the parallel market exchange rate of the Nigerian currency against the greenback recently fell to a new low of N710 to the dollar. The rapid devaluation of the currency is reportedly being fueled by Nigerians converting their naira savings into the greenback.
Yet, despite the continued depreciation of the currency in the parallel market, the Central Bank of Nigeria (CBN) insists that the official exchange rate of the naira to the dollar remains at approximately N424 to $1.
In a statement following the naira’s latest fall, Osita Nwanisobi, the CBN’s director of corporate communications, blamed speculators for causing the currency’s recent decline. However, Nwanisobi argued that the central bank’s interventions such as the naira to dollar stimulus scheme and the RT200 FX program are already helping Nigeria address its long-standing problem of foreign exchange shortages.
Allowing the country’s foreign currencies helps stabilize the naira exchange rate. Yet, as a recent Bitcoin.com News report suggests, the CBN’s Naira-to-Dollar Remittance Incentive Scheme — launched in March 2021 — has failed to help stem the naira’s depreciation. The report pointed to the decline of the naira against the dollar, which at the time was over 25%.
Crypto trade fuels Naira depreciation
Adding to his claims that the central bank’s interventions have worked, Nwanisobi said Nigerians should also help “strengthen the value of the naira”.
Meanwhile, Aminu Gwadabe, president of the Association of Exchange Operators of Nigeria, was quoted in a Bloomberg report suggesting that crypto trading could be fueling the depreciation of the naira.
“The US dollar percentage of the cryptocurrency is used in determining the value of the local currency,” Gwadabe quoted as explaining. On why Nigerians are buying the US dollar, Gwadabe said they are doing so because they have lost confidence in the naira.
Register your email here to receive a weekly African news update delivered to your inbox:
What do you think of this story? Let us know what you think in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Rebuttal: This article is for informational purposes only. This is not a direct offer or solicitation of an offer to buy or sell, nor is it a recommendation or endorsement of products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use or reliance on any content, goods or services mentioned in this article.