Despite the dollar holding near four-month lows, the value of the Nigerian naira fell to its lowest level in almost eight weeks on the black market as traders braced for a more significant than anticipated reduction in interest rates by the Federal Reserve in 2024.
On the black market for foreign exchange, the naira was trading at N1260 to the US dollar.
Due to severe foreign exchange shortages that have existed since the low oil prices prior to the pandemic, foreign investors have been forced to sell their local assets and return their earnings in dollars to Nigeria.
The dollar gains value as the local currency when there is a shortage of dollars, which eventually weakens the naira since there is more demand for the few dollars that are available.
Furthermore, Nigeria’s weak economic performance means that the naira will probably face more challenges in the upcoming year.
In his most recent statement, CBN head Mr. Yemi Cardoso noted that oil export earnings would decline in the coming year.
