Naira Surges Against Dollar Amid Growing Crypto Use in Nigeria

Naira Surges Against Dollar

After weeks of depreciation, the Nigerian Naira has shown a significant rebound in the parallel market, trading at around N730 to the U.S. Dollar. This reflects a gain of N145 from its previous value of N885. Despite this improvement, the Central Bank of Nigeria (CBN) emphasizes that the parallel market accounts for less than 1% of foreign exchange transactions and should not be used to determine the Naira's value.

Currency Redesign and Its Impact

Analysts attribute the Naira's recent depreciation to the CBN's decision to replace outdated banknotes with new designs. President Muhammadu Buhari supports this move, but concerns have been raised by academics and the IMF about its potential economic implications.

e-Naira Struggles to Gain Traction

While the Naira has strengthened, its digital counterpart, the e-Naira, has not achieved the expected adoption. Despite government efforts to promote its use, only 0.5% of Nigerians actively use the CBDC. Additionally, many citizens struggle to differentiate between Bitcoin and the e-Naira, highlighting a lack of awareness.

Cryptocurrency Adoption Soars

In contrast to the e-Naira, cryptocurrencies like Bitcoin are gaining immense popularity in Nigeria. According to recent data, 48% of Nigerians own Bitcoin, making the country second globally in Bitcoin ownership. Google Trends also reveals Nigeria as the top country for cryptocurrency-related searches, with a score of 371 out of 15 surveyed nations.

This surge in crypto adoption reflects a growing interest in alternative financial systems, driven by economic challenges and a desire for financial inclusion.