ABUJA, July 20 (Reuters) - Nigeria's naira traded at a record low of 860 per dollar on the black market on Thursday, according to traders, weakening below its official rate a month after the country devalued the currency and ahead of a central bank policy meeting next week.

The bank last month allowed the naira to weaken by more than a third in a bid to unify Nigeria's multiple exchange rates and to lure foreign investment to shore up liquidity in an economy struggling with dollar shortages.

Last month's devaluation helped narrow the gap between the naira's exchange rates on the official window and the black market but pressure is gradually building up especially from individuals paying for expenses abroad.

The naira has been swinging widely on the official market since the devaluation. It touched a new low of 853 naira per dollar on Wednesday, according to OTC market regulator, FMDQ Exchange.

The naira has been swinging widely on the official market since the devaluation. It touched a new low of 853 naira per dollar on Wednesday, according to OTC market regulator, FMDQ Exchange.

The currency closed at 742 naira against the dollar on the official market on Thursday, Refinitiv data showed.

Dollar shortages on the official market have seen customers turning to the black market, helping to widen the gap between the spot rate and the black market, one trader said.

Nigeria has embarked on its boldest reform agenda in decades, including the removal of a popular but costly petrol subsidy and the loosening of restrictions on foreign exchange trading, a gamble President Bola Tinubu hopes will boost sluggish economic growth.

Analysts have warned that a weaker currency and the fuel subsidy removal would likely to push inflation higher in the short term.

The central bank will meet on Monday and Tuesday to set interest rates with investors looking for measures to support the currency.

clinician2x:
I thought they said tinubu unified the naira dollar exchange rate and there's no more black market. Why are we still talking about black market and what exactly did tinubu do?

With the devaluation of Naira, it is now crystal clear that anyone who invested in ONLY Naira denominated debt instruments without hedging has depleted their life savings.

From 2015 - 2023, the value of Naira has lost more than 380% in value. This demonstrates that no matter how much you compounded in the last 8 years. It is a TOTAL LOSS !



An interesting fact
"A" had $100,000 in 2015 and decided to invest in Nigerian debt instruments. A converted the funds to Naira @ N216/$ = N21,600,000. A locked in the funds for 10 years at 17% per annum.
After 8 years, A had an interest of N29,376,000. A total of N50,376,000 was realised after 8 years.

"B" had $100,000 but was lazy and decided to leave his own in a Dom acc with interest rate of 0.3%. Interest rate after 8 years was $2,400. Today, B decided to sell. Total capital and interest of $102,400 was sold @ N835/$ = N85,500,000. ("He doesn't have to sell yet"wink

A heard what B did and said had I known. Moral of the story, investing in debt instruments of a declining economy will only make you POOR. There is a reason why Dangote is the richest man in the world yet he uses public debt instruments to fund some of his projects.