Naira, the basic monetary unit of Nigeria, on Thursday weakened against the dollar despite a significant increase in liquidity at the investors and Exporters (I&E) forex window, the official foreign exchange market.
After trading on Thursday, Naira lost 0.10 percent as the dollar was quoted at N428.16 compared to N425.75 closed on the previous day at the I&E window, data from the FMDQ indicated.
Most foreign exchange market dealers who participated in the auction on Thursday maintained bids at N413.50 (low) and N444 (high).
At the parallel market, also known as the black market, the local currency depreciated by N1 to N615 per dollar (selling price) from N614 (buying price).
The persistent pressure on Naira has been attributed to increased demand for the greenback by the users amid shortage.
Nigeria’s external reserves, which give the Central Bank of Nigeria (CBN) the muscle to defend the naira, have declined by 3.0 percent year to date to $39.25 billion as of July 4, 2022 from $40.5 billion recorded at the beginning of the year.
“The weakness in external reserves sustained pressure on the Naira against the dollar. There has been no reprieve from other sources of dollar inflows, as foreign investors are reluctant to invest, hence the currency has reached a record low,” Ayodeji Ebo, Chief Business Officer, Optimus by Afrinvest, said.
He noted that the recent moves and initiatives to improve dollar supply has yielded minimal results, hence the Apex bank continues to conserve its external reserves. The banks have had to ration foreign exchange by suspending individual withdrawals with Naira debit cards and lowering limits on international transactions to $20 (N10,000) from $100 equivalent to N50,000.
The CBN in July 2021 stopped dollar sales to the Bureau De Change (BDCs) following what it described as forex infractions.
Consequently, the CBN pushed and increased dollar supply to banks to meet the legitimate needs of end users across the country.
Such legitimate needs include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees and medicals.