Naira falls to N1065/$, BDC operators seek urgent reform
The nation’s currency, the naira plunged the lowest in record on Wednesday at the parallel market, with the local currency opening for trading on the street market to an all-time low of N1065 to the dollar at the unofficial window of the forex market.
The local currency was reported to have closed on the unofficial window at N1060 to the dollar on Tuesday, with the dollar shortage driving the rapid depreciation of the naira at all levels.
The naira also weakened by 8.9 percent to N848.12 to the dollar in the official I&E forex market on Tuesday, according to data from FMDQ.
Trades in the foreign exchange market were executed within the range of N700 to N981 per dollar, according to an investment note by Lagos-based investment banking firm Chapel Hill. The value of the dollar traded jumped 2.12 times to $133 million, the firm said.
The Central Bank of Nigeria (CBN) eased foreign exchange controls in mid-June after President Bola Tinubu criticised monetary policy measures and pledged an end to the nation’s multiple exchange rate regime.
The policy saw the official rate plunge 40 percent, briefly aligning with the parallel market before the spread began to widen again. Until Tuesday, the official rate stayed near N800 to the dollar, even as the street rate weakened past N1,000 to a dollar
Foreign exchange operators attributed depreciation of the naira to illiquidity that persists in the market in the absence of central bank intervention.
The widening premium between the official rate and the black market “indicates that the exchange rate has not been setting a clearing price,” the central bank said on Monday after it scrapped restrictions put in place eight years ago to manage demand for dollars.
Nigeria has been struggling to boost the supply of dollars for years after falling oil revenue left its foreign exchange reserves in a perilous state.
The Chairman of the Association of Bureau de Charge Operators in Nigeria (ABCON), Aminu Gwadabe, had in a chat with an agency attributed the rapid slide in the value of the naira to huge liquidity driving up demand for unavailable dollars in the market.
Gwadabe also blamed uncertainties and loss of confidence of the public and international communities in the economy, rising inflation, and a low interest rate at the interbank market, which have led to a low attraction for alternative investment.
“Our sources of foreign income largely depended on oil proceeds, while the most important was the lack of our productivity, economic base, and complementary infrastructure.
“The monopoly and non-competitiveness of the I&E window In order to salvage the situation, I personally recommend the following:
“One, we should abolish the 1&E window and allow willing buyers and sellers to dictate price mechanisms with legislation to enable them instead of circulars.
