Naira Redesigning: Naira Plunges to N785/1$, Confirms Finance Minister’s Fear

Barely 48 hours after the Central Bank of Nigeria (CBN) announced plan to redesign three naira denominations, the local currency has caught fevers from the new policy, thus tumbling to a record low of N785 After.

Nigeria’s central bank announced on Wednesday that it plans to replace N200, N500 and N1,000 notes by January 31 2023.

The decline in the value of the currency only confirmed the fear and sentiment of Nigeria’s Minister of Finance and Budget Planning, Zainab Ahmed, who believed the new development would exert negative impact on the naira in the forex market.

“To me, the policy may be a well-conceived one, but the timing going by the realities on ground, is very wrong as the Naira may fall to as low as N1,000 to a US dollar before January 31, 2023 fixed for full implementation of the policy,” Zainab said on Friday.

Specifically, the naira fell on the official market, where it touched a record N442.62 to the dollar before regaining some lost ground.

However, the situation was worse in the parallel market, where the naira weakened to N785 to the dollar from 768 on Thursday.

The CBN said the move will help curb currency hoarding, slowdown inflation and disrupt kidnappings-for-ransom in Africa’s largest economy.

Expert expect more reaction to the new policy across markets including the FX segment as the apex bank unfolds the modalities for implementing the policy in the coming weeks.