Evaluation of Nigerian currency reveals it has continued to lose market value and the latest decline of the naira is N470 per $1 at the black market on Wednesday, amidst worse economic recession in the country.
According to traders and market analysts, obtaining the dollar has remained a major challenge in the market due to escalating demands of the foreign currency by parents whose children are studying abroad as well as business travellers.
The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, who spoke to newsmen, confirmed the latest devaluation of the country’s currency.
“The rate is N472 to the dollar as we await the kick-off of the distribution of dollars to the BDCs by Travelex on Friday. As we speak, no bank is dispensing dollars to the BDCs.
“The BDCs’ accounts were debited by some banks since Monday and they are not able to pay any of the BDCs so far debited by them. This is really sending a bad signal to the market.”
Speaking further on the development, a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said the parallel market can be used to reflect on what the naira should be doing, adding that it does not mirror naira’s performance.
Mr. Ezun described the situation as a “demand and supply dynamics.” He said the naira volatility in the parallel market will continue as long as the 41 items excluded from the official forex market remain banned.
“Around this time, a lot of people are paying school fees abroad and we see a lot of demand for forex for other sundry expenses or obligations. So, all of these will put pressure on the naira at the parallel market.
“But the parallel market will always respond to liquidity, which is not available. The parallel market will help you to assess the level of liquidity in the market.
“So, if liquidity is high, we will see it in the parallel market. But as we speak today, there is no liquidity in the market, and that is why we keep seeing that volatility in the parallel market.”
The Banker predicted that naira might devalue further to N500 per dollar in the future if there are dollar inflow into the market. Therefore, Ezun suggested that CBN can use monetary policy to attract inflow of the USD into the fixed-income market, by foreign investors.