The value of the Nigerian naira hit a new historic low in the parallel market on Wednesday trading within the range of N1,035 to N1,040 against the US dollar.

This N1,040 exchange rate represents a 4.0% depreciation, equivalent to N40, compared to its rate of N1,000 just two weeks ago.

Street traders are now buying the dollar at N1,025 and selling it at N1,045, leaving them with a N25 profit margin.

In contrast, the official exchange rate at the investors’ and exporters’ window saw the local currency depreciate by 0.70% to close at N776.80 to the dollar on the same day.

Data from the FMDQ OTC Securities Exchange, responsible for overseeing official foreign exchange trading in Nigeria, reported a total of $60.30 million in FX transactions at the I&E window.

The ongoing poor performance of the naira against the US dollar has been linked to liquidity problems.

Data from the Central Bank of Nigeria disclosed a decline in Nigeria’s foreign exchange reserves, which reached a two-year low of $33.23 billion by the end of the third quarter of 2023.

This represents a $5.01 billion decrease year-on-year, compared to the $38.25 billion reported in September 2022.

On a quarter-on-quarter basis, foreign reserves fell by $881.84 million, having closed the second quarter at $34.11 billion.

The World Bank recently labeled the naira, along with Angola’s kwanza, as the “worst performing currencies” in Africa for the year 2023, both currencies having depreciated by nearly 40%.

Forex traders have reported a heightened scarcity, as the demand for the US dollar continues to outstrip supply, leading to exchange rates ranging from N1,035 to N1,045 per dollar in the parallel market.