Nigerians are always interested in knowing the exchange rate of dollars to naira. Questions like, “how much is dollars to naira”, and statements like “dollar is high” are popular across the country.
For one thing, the naira to dollar exchange rate serves as a price adjustment signal for businesses and traders all over Nigeria.
Prices of commodities are always anticipated to increase once there are reports that the Nigerian currency weakened against the dollar.
Sadly, we can’t say the case is the same in reverse order. It is almost, seemingly impossible for cost to diminish after they increased.
That aside, the US Dollar (USD) is arguably, the most popular and commonly converted currency in the world. It is the dominant global reserve currency, and is thus, held by almost every central bank in the world.
The United States currency is steadily used as a benchmark in the Forex market, and has a direct impact on commodity prices as it is acknowledged as the standard currency in the commodity market.
Its international acceptance gave rise to what the world regard as the ‘dollarization of the USD’. The phrase refers to the use of theUnited States currency as an official legal tender in some countries.Other countries use the US dollar as an accepted alternative form of payment.
While the code and symbol for theUS currency are respectively ‘USD’ and ‘$’, that of the Nigerian Naira are ‘NGN’ and ‘N’.
The Nigerian naira is divided into 100 kobo whereas the US dollar is divided into 100 cents.
History has it that the Nigerian currency gained a record low of 53 kobo against the USD in September 1980, but weakenedand reached an all-time high of N283.50 in June 2016.
From the 70s to early 80s, the naira exchanged for 90 kobo to $1. In 1993, the naira to dollar exchange rate climbed to N17 for $1 following the introduction of Second-Tier Foreign Exchange Market (SFEM) in 1986.
Thereafter, Bureau de Change was ushered into the Nigerian economy. Nonetheless, naira continued to depreciate and practically lost ground to USD.
Throughout SaniAbacha’s reign, the naira maintained a rigid official exchange rate. Dollar to naira was authoritatively placed at $1 to N22.
That, gave rise to the mainstreaming of the forex black market. Records has it that the naira traded at about N88 to $1 at some point whereas the official dollar to naira exchange rate stayed at N22.
Between 1999 to 2004, after the Interbank Foreign Exchange Market (IFEM) was introduced by the CBN (Central Bank of Nigeria) governor – Joseph Sanusi, the dollar to naira exchange rate traded at 85 naira. That was for the CBN exchange rate. It was traded N150 for 1USD at the black market.
The next CBN governor, ChukumaSoludo, liberalized the nation’s foreign exchange procedure which enabled the naira gain almost 20 percent strength against the dollar.
The US currency was trading at N127 to $1 when Soludo became CBN governor. Sometimes in 2008, naira strengthened to 115 naira, and was at N148 when his tenure expired in 2009.
During SanusiLamidoSanusi era, naira to dollar was exchanged at N148 to 1USD when he came to office in 2009. He was suspended in 2014 and left the dollar to naira exchange rate at N164 for $1.
In 20th June 2016, the Nigerian naira lost about 30 percent and skyrocketed to N260.5 per USD following the central bank switch to a market-driven currency system to manage dollar shortage.
Prior to that, 1USD was exchanged between N197 to 199 naira. The USD has gained about 42 percent strength against the Nigerian currency between July 2015 to July 2016.
So far in 2016, one Nigerian naira has equaled an average exchange rate of $0.005, a minimum of $0.004 and a maximum of $0.005.
Experts have partly, blamed the USD consistent despise of the Nigerian naira for the unpleasant economic conditions of the West African country. The weak naira left Nigeria struggling to manage increase in import cost which thrived after global oil prices declined and in turn, triggered a decline in foreign reserves.
Oil production also nosedived to a historical low record in May 2016 to worsen the situation. Reacting, consumer prices climbed15.6 percent in May 2016. It was the highest jump in more than six years. As the inflation rate skyrocketed, cost of food, housing, utilities and transport surged.
The foregoing is also linked to the GDP that shrieked by 0.36 percent in the first three months of 2016. Experts said it was the first contraction since that experienced in June 2004.