236 sats \ 1 reply \ @siggy47 29 Oct 2022 \ on: The Nigerian naira plunges to a record low against the dollar bitcoin
This could be big news. Nigeria's CBDC is not getting any traction, and bitcoin adoption continues to rise. I ask African members of SN to give their opinions.
The naira fell on the official market, where it touched a record 442.62 naira to the dollar before regaining some lost ground.
The CBN rate didn't hardly budge -- if this Bloomberg quote is accurate the NGN lost about 1% then rebounded essentially back to where it had started at the beginning of the week:
The central bank has, for the past few months, been allowing their rate show the naira being devalued over time:
In the unauthorized parallel market, the naira weakened weakened to 780 to the dollar from 753 on Wednesday.
This "parallel market" is the local free market rate, and these numbers from Bloomberg match the rates shown by NGNRates:
So that shows the naira lost 3.5% since the Wednesday announcement of the bank demonetizing their largest bank notes (which range from N200 to N1,000 (which using parallel market rates, are worth from ~$0.25 to ~$1.25, respectively).
The local currency was quoted at 787.9 to the USDT as of 3:41 p.m. local time on cryptocurrency trading platform Binance, compared with 763.5 naira on Wednesday.
Haha. Great to see Bloomberg quoting a digital rate, which can sometimes diverge from even the parallel market rate due to there being less liquidity and because of friction in moving funds from the trades to and from the banks.
In this instance, the USDT/NGN rate on Binance is likely going to show an even weaker naira going forward because there will be more pressure to buy USDT as a result of the demonetization drive as people use bitcoin, stablecoins, and other cryptocurrencies rather than move their soon-to-be rendered worthless physical currency notes into the banks.
The central bank is trying to force a cashless economy, and they may get that but a not insignificant portion of that will be on bitcoin and "crypto" networks, rather than their new domestic payment card and CBDC networks. See the following post for further links on those:
Nigeria to redesign N200, N500 & N1,000 notes and demonitize old notes Jan 2023
#85810
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