The naira suffered a historic plunge to N775/$ two days after the Central Bank of Nigeria (CBN) announced it was redesigning the 200, 500, and 1,000 naira notes.
On Friday morning, October 28, 2022, the exchange rate between the naira and the US dollar plunged sharply, trading at a minimum of N775/$1 on the black market, down from N760/$1 on Wednesday when CBN made the announcement.
This is according to information from black market operators interviewed by Nairametrics.
The depreciation of the local currency at the black market was attributed to a spike in dollar demands prompted by CBN’s plan to redesign the naira.
Nairametrics anticipated that the policy move by the apex bank would force some people to convert their naira into dollars.
What the Black market operators are saying
Abu, a black market operator in Lagos, told Nairametrics that he had just witnessed an unexplained jump in demand.
“The market is highly unpredictable; demand is too high. My dollar rate is N775/$, but by tomorrow it may have increased,” he said.
Musa, another operator, told Nairametrics that there had been an increased dollar scarcity because of the unstable prices. He said:
“The dollar price has become too unstable, and it is also difficult to get. I don’t have to sell now, which may be holding out for a higher price.”
Suleiman said the spike in demand started after the CBN announced the introduction of the new naira notes. He said:
“Honestly, I don’t understand the demand. Since the CBN announced the new naira, there has been an increase in demand,” he added. “The man wan scatter everything.” (sic)
In cases you missed it
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said the redesigned N200, N500, and N1,000 notes would start circulating by December 15, 2023.
The naira redesign simply entails a change in the currency’s appearance and security features. The redesign would not have any impact on the face value of the naira.
Emefiele also believes that redesigning some naira notes would improve the currency’s value and rein in inflation.