Key questions this article answers
  1. The naira fell to a record low of ₦955/$ at the black market; why?
  2. How will the naira perform with the new NNPCL stabilisation fund?

On Wednesday, NNPC Limited announced that it secured a $3 billion crude oil repayment loan from AFREXIM Bank to support the CBN’s effort in defending the naira post the forex reforms. 

The NNPCL will repay the $3 billion loan with crude oil, and this cash-for-crude deal comes at a crucial time when the CBN struggles to stabilise the naira.

On August 10, the naira fell to a record low of ₦955/$ at the black market due to high forex (FX) demand and lingering FX supply shortages. By August 17, the naira appreciated by 10% to ₦860/$.

After adopting exchange rate reforms, the currency’s value is expected to depreciate as initial market reactions to ascertain the fair value of the currency lead to volatility. For instance, after Egypt liberalised its exchange rate market in 2016, the Egyptian Pound shed over 50%. 

As in Egypt, the official rate of the naira has