The naira on Tuesday plunged to a record low against the dollar following a revision of the methodology used to set its exchange rate.
This situation marks the second devaluation of the currency in seven months.
The naira depreciated by 31% to 1,413 to a dollar on Monday in the NAFEX fixing loop, the official foreign exchange window, according to data published by FMDQ, which calculates the exchange rate.
The Bloomberg, in its Roundup Wednesday, described the development as “devaluation”.
NAFEX – The Nigerian Autonomous Foreign Exchange Fixing is the reference rate for Spot FX operations in the Autonomous FX Market, which comprises recognized FX trading segments, including but not limited to the Inter-bank market.
Reports show that the currency sank following strong demand on the official market, exceeding N1,455 quoted on the parallel market.
The latest move came after the Central Bank of Nigeria (CBN) accused traders of manipulating the exchange rate by under-reporting transaction rates.
That brings the naira closer to its parallel-market rate of N1,468, and follows a devaluation of almost 30% in June last year, as the CBN liberalised the currency regime in an attempt to attract inflows and improve liquidity.
On Tuesday, the CBN said it had cleared all verified dollar backlogs owed to foreign airlines operating in the country, after paying out an additional $64 million.
The International Air Transport Association (IATA) said that while it welcomed the payment, airlines are still owed about $700 million.
“This is exacerbated by the devaluation of the Nigerian naira, which has dropped significantly against the US Dollar,” it said in a statement.
“Airlines should not be unfairly penalized by the lower exchange rate”, it said.