Naira drops to record low of N1,421 per dollar on official market

Nigeria's naira dropped to a record low against the dollar on the thinly traded official market on Friday, FMDQ Exchange data showed on Monday, as the currency swung widely to overshoot the unofficial parallel market rate.

The naira fell as low as N1,421 to the dollar, during trading on Friday, FMDQ data showed, compared with around N1,400 quoted on the parallel market. The currency later closed at N891.90 naira on the official market.

The latest fall occurred after Central Bank Governor Olayemi Cardoso last Wednesday said the bank was trying to improve liquidity in the foreign exchange market.

Kyle Chapman, foreign exchange markets analyst, said the naira has overtaken the record low level it hit on the parallel market which could hamper the influx of capital needed to stabilise the exchange rate.

"The downwards spiral is becoming self-perpetuating at this point. The further it falls, the less investors want to enter Nigeria, and the deeper the risk premium embedded into the naira rate," Chapman said.

The naira's official exchange rate has been drifting towards the parallel market level as the central bank is yet to clear outstanding amounts owed in forward deals, worsening a shortage of foreign-currency in the West African nation.