The Central Bank of Nigeria has made a slight adjustment in the value of the naira against other international currencies, particularly the US dollar, which is the most used currency for foreign trade. Since August 22, 2016, 1 dollar was 305 naira, but on March 20, 2020, the dollar was worth 360 naira.

The Central Bank has also allowed the US dollar to be officially sold on the open foreign exchange market at 380 naira against 360 naira previously. This means that the local currency has been devalued by 17.9% regarding the Central Bank rate and 5.5% for the recommended market rate.

The decision may have been precipitated by the impact of covid-19 which put pressure on the price of commodities, including oil, Nigeria's main export. As a precautionary measure, foreign investors targeting Nigeria have reduced their foreign capital commitments in the country. However, this economic situation simply adds to the high macroeconomic challenges that were already present since 2019.

Capital inflows in the form of foreign exchange rose sharply in 2019, reaching $24 billion. This is a record level since the year 2014. However, the amount declined from $8.5 billion in the first quarter to only $3.8 billion in the fourth quarter; a decline of 55.2% over the period.

Before the covid-19 became a global problem, the country's foreign exchange reserves had shrunk from 42 billion naira in September 2019 to less than 39 billion naira by early January 2020. Also, there has been a decline in portfolio investment, which is a significant source of strength for Nigeria's foreign exchange reserves.

Idriss Linge