The naira’s value has gotten worse, according to research by Newsmen, as a result of the growing disparity between the supply and demand of dollars in banks and on the black market.
The naira fell from 860/$ to 960/$ at the parallel market as of Friday, losing N100 in less than three weeks.
The naira had previously traded at 471/$ in the Investor & Exporter window until the Central Bank of Nigeria allowed the naira to freely float against other world currencies in June.
The naira, however, increased to 664/$ on June 14, a day after the regulator launched the local currency.
See Black Market Exchange Rate For Dollar To Naira Today, 11th May
The naira, which fluctuated within a narrow range at both the official I&E window and the parallel market, however, soon began to witness serious volatility in the black market.
In Lagos, the local currency dropped to 925/dollar after surpassing the N900/dollar threshold last week.
The naira peaked on Friday at 799/$ before falling to a low of 740.60/$ at the I&E forex window. On the parallel market, however, the naira closed at 930 to the dollar in Lagos and 960 to the dollar in Abuja.
The occurrence occurred when banks were being hammered by a dollar shortage, with some institutions claiming that they lacked enough dollars to meet client demand.
Currency merchants at the parallel market also lamented the lack of dollars.
See How Much Dollar Exchange To Naira Today 10 January 2022
According to bank authorities, money was being repatriated through banks after the CBN removed cash deposit restrictions on domiciliary accounts in June.
As a result, he said the demand for the dollar had outweighed the supply significantly.
“Some of the dollars are being repatriated through the banks but the demand is still higher than supply because everyone is still sourcing for dollar for imports, PTA, BTA, others,” an official of a lender, who chose to speak on condition of anonymity because he was not authorised to speak on the matter, said,
“Nigerians are still hoarding dollar, customers are still hoarding FX because they don’t trust the policy. Banks are not getting forex supply from the CBN regularly like before,” he added.
Also, an official of tier-1 bank, who pleaded anonymity, said, “Before, the banks used to get dollar from the CBN every week but now, it has reduced drastically; we have not been getting again. Banks are sourcing for forex everywhere. The banks don’t have enough. We have not been getting supply from the CBN for weeks now.”
See How Much Naira Exchange To Dollar Today November 30 2021
Aminu Gwadabe, the president of the Association of Bureau De Change Operators of Nigeria, told our correspondent in a conversation that the FX market’s lack of liquidity had continued to see a lot of speculators assault the naira.
He said, “The dwindling supplies in the I&E window shifted the demand to the parallel market where volatility and spikes is most pervasive. The entire forex market is plagued by liquidity shortages.
“The banks, as a result of the supply shortages, are limiting their available position for the financing of visible letters of credit and abandoning the invisible request like PTA, school fees, medicals of their clients and inadvertently adding more pressure in the parallel market.”
He added, “As it is, most licensed BDCs due to their demand for KYC requirement have lost their clients to the parallel and undocumented space with no regulation and standardisation. It is indeed a difficult time for most of our members as we are excluded from the harmonised market.”
See How Much Dollar Exchange To Naira Today 10 December 2021
Gwadabe suggested remedies, saying Nigerians should strive for a stable exchange rate free of unethical economic practises such arbitrages, hoarding, and panic purchasing.
“ABCON is desirous to partner the apex bank and the Federal Government for an elaborate dialogue and engagement to champion paths to naira recovery,” he said.
In order to integrate BDCs in the harmonised markets, he continued, the financial architecture needs be overhauled.
According to him, the monetary and fiscal authorities should establish supportive laws and regulations.
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