Nigeria’s currency on Friday fell by N6.17k to an average rate of N496.50k on the black market, as against an average rate of N490.33k it exchanged on Thursday.
This is the lowest the naira has fallen since August 2020 amid persisting scarcity of the greenback.
At the Bureau De Change (BDC) segment of the foreign exchange, naira remained at N490 on Friday after it weakened by N5 on Thursday as against N485 on Wednesday.
At the Investors and Exporters (I&E) forex window, the market opened with an indicative rate of N388.70k, signalling N0.55k depreciation compared with N388.15k opened with on Thursday, data from the FMDQ revealed.
The foreign exchange market has been under pressure since March 2020 following a sharp drop in oil prices as a result of Covid-19 pandemic.
Traders told BusinessDay that the exchange rate might remain at the current rate at the end of the week because the cost of the dollar doesn’t usually go higher on Fridays.
Data from BusinessDay exchange rate monitor show that the cost of dollar peaked at N480 in August before strengthening to N430 on September 2, 2020 after the Central Bank of Nigeria (CBN) announced that it would resume dollar sales to the Bureau De Change (BDC) operators on September 7, 2020.
Godwin Emefiele, governor of the CBN, said after the Monetary Policy Committee (MPC) meeting on Tuesday that the black market is a shallow market of only about 5 percent of the foreign exchange market which is patronised by people who go there for cash to offer bribes and corruption. Parallel market is the place where people who don’t want to provide documents go, he said.
“At the Investors and Exporters (I&E) window, the rate is about N386 or N387/$1. We don’t control the I&E window. Why will anyone use the parallel market to say that the exchange rate is over N480/$1?” Emefiele said.
The CBN sells $10,000 twice weekly to the BDCs and has sold over $1 billion since September 7 when it resumed dollar sales to them after the lockdown occasioned by Covid-19 pandemic.
This, however, has failed to shore up the value of naira, which has continued to weaken due to speculative activities.
The daily foreign exchange turnover rose significantly by 303.63 percent to $210.25 million on Thursday from $52.09 million recorded on Wednesday.
Consequently, naira remained stable at N393.25 per dollar on Thursday at the I&E window as most participants maintained bids between N383.00 and N395.00 per dollar according to analysts at FSDH research.
Responding to a question on what the CBN can do to stop naira depreciation, Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said there should be enforcement of compliance of all dealers and retailers in foreign exchange market to extant regulations.
He also suggested increased security surveillance of the nation’s borders, deepening Diaspora remittances, increased liquidity ratios of banks, sanctioning errant operators, and tighter regulations on cash deposit in domiciliary accounts.
