• Friday, March 29, 2024
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BusinessDay

Naira falls further to N477 on increased demand amid dollar shortage

Getting financially prepared for the 2023 elections

Nigeria’s currency on Wednesday continued its free fall with the dollar being sold at N477, representing a loss of N2 compared to N475 traded on Tuesday on the black market.

Traders said there was increased demand by end users amid dollar scarcity. 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.

At the Bureau De Change (BDC) segment, naira also weakened by N1 as the dollar sold for N475 on Wednesday as against N474 sold for on Tuesday.

The BDC operators funded their accounts on Wednesday in anticipation of dollar disbursement by the Central Bank of Nigeria (CBN) on Thursday.

It has been over three months since the CBN resumed dollar sales to BDCs in September 7, 2020 and had sold over $1 billion. However, this has not been able to stop naira depreciation as the local currency has continued to weaken in value against the dollar due to speculative activities.

The Apex bank on March 26 suspended foreign exchange sales to BDCs, following the Covid-19 lockdown.

At the Investors and Exporters (I&E) I& forex window, Naira weakened by 0.31 percent as the dollar was quoted at N386.00 as against the last close of N384.80. Analysts at the FSDH research said most participants maintained bids between N380.00 and N393.30 per dollar.

Total foreign exchange inflow into the I&E window from January till November 17, 2020, stood at $15.8 billion as compared to $30.0 billion within the same period in 2019, according a report by the FSDH research.

The FX shortage has widened following the decline in crude prices, which has pressured FX earnings throughout the year. As a result, CBN has been forced to curtail FX supply in a bid to maintain the stock of FX reserves.

Nigeria’s external reserves have declined by 11.14 percent to $35.54 billion as at November 17, 2020 compared to $39.99 billion recorded in November 18, 2019, data obtained from the CBN website indicated.