• Friday, May 24, 2024
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Naira dips further, exchanges for N1,590/$

Naira drops further to N1,510 on black market

…as dollar shortage persists

Nigeria’s naira on Thursday fell to a record low of 1,590 as dollar shortage persisted on the parallel market, commonly referred to as the black market.

The naira depreciation followed a strong demand for dollars by speculators, as well as individuals traveling for business, tourism education and health, according to currency dealers.

With the current exchange rate, naira has lost 1.26 percent of its value against the dollar when compared with N1,570 per dollar offered by some traders on Wednesday. Against the N1,400 dollar that was sold on the first trading day of February 2024, the naira lost 11.95 percent at the black market.

Read also: Nigeria’s inflation hits record high of 29.90% on naira weakness

“I buy dollar at N1,550 and sell at N1,590,” Yusuf Dan, a street trader said. Another street trader at the Airport told BusinessDay that dollar is scarce in the market because the Central Bank of Nigeria (CBN) has blocked their source of dollar supply.

In a pivotal move aimed at bolstering dollar supply in the country, the CBN on July 10, 2023, announced the revocation of a longstanding ban on diaspora remittance payouts in Naira currency. The decision, signifies a significant shift in policy, enabling banks and International Money Transfer Operators (IMTOs) to disburse funds to beneficiaries in local currency.

In response to the circular, banking institutions and IMTOs are gearing up to implement operational adjustments to accommodate the revised remittance framework by issuing notices to their customers.

Furthermore, the Central Bank’s decision is expected to engender a ripple effect, catalysing increased remittance inflows and bolstering the country’s foreign exchange reserves.

The foreign exchange (FX) market in Nigeria experienced a significant 56.58 percent decline in dollar supply on Wednesday, just two days after witnessing a surge in liquidity driven by the Central Bank of Nigeria’s (CBN) interventions.

Read also: CBN bars IOCs from 100% remittance abroad as naira slide bites

An analysis of the FX market auction showed that banks and other key players in the market sold a total of $117.87 million on Wednesday, a sharp drop from the $271.50 million recorded just the day before on Tuesday at the official FX market.

As a result of this sudden shortage, the Nigerian naira depreciated by 0.29 percent. Data from the FMDQ Exchange revealed that the dollar was quoted at N1,503.38 on Wednesday, compared to N1,499.07 on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).