On Monday, the Nigerian naira hit historic lows on both the official and unofficial markets and stocks had their largest one-day decline in over a year as nervous investors liquidated local assets.
After continuing losses, the currency fell to 1,712 naira per dollar in late dealings on the official market and to almost the same level on the unofficial market.
The greatest economy in Africa has been forced to historic lows in value due to severe dollar shortages, but foreign exchange availability is increasing, according to central bank governor Olayemi Cardoso.
The most recent decline in the value of the dollar and the stock market follows information released on Thursday indicating that the nation’s inflation rate increased in January, hitting nearly 30% annually due to rising food prices.
“The naira will continue to lose buying power if policy changes are not seen to control inflation. Given the steadily declining real yield on Nigerian debt instruments, there is also a chance that it will discourage international investors even more, according to Kyle Chapman, an FX markets analyst at Ballinger & Co. in London.
Laptops 1000Following declines in banking, consumer goods, and industrial equities, stocks on Nigeria’s All-Share Index saw a 3.15% decline on Monday, marking the largest decline since October 2022.
To assist in dragging the index, heavyweight Dangote Cement and MTN fell below the 10% maximum permitted on the market.
Investors had been using stocks as a hedge against inflation. Although Cardoso has raised open market rates in an attempt to attract investors back to bills, which had become less appealing than stocks due to rising inflation, yields will still need to rise because Treasury rates still trail the benchmark policy rate, and the depreciation of the naira.
