Naira’s struggle against the US Dollar has intensified, marked by further depreciation in both the parallel and official markets. This downward trend can be attributed to various factors, including speculation, hoarding, and disruptions in the Central Bank of Nigeria’s (CBN) dollar sales program to Bureaux De Change (BDCs).
Despite efforts to curb street currency trading, the Naira slipped to N1,435 per dollar in the parallel market, compared to N1,415 per dollar just a day prior. Similarly, in the Nigerian Foreign Exchange Market (NAFEM), the Naira depreciated to N1,421.06 per dollar. This persistent decline widened the gap between the parallel market and NAFEM rates, reflecting growing instability in the forex market.
The CBN’s initiative to sell dollars to BDCs aimed to stabilize the retail forex segment. However, complaints from BDC operators about slow disbursement of dollars have raised concerns. Some operators have even requested refunds due to delays and uncertainties in the forex market, indicating challenges in the CBN’s intervention strategy.
Speaking anonymously, BDC operators highlighted the frustration caused by the prolonged wait for dollar disbursement, with some expressing doubts about the CBN’s capacity to meet demand promptly. The slow pace of dollar supply has exacerbated the situation, leaving operators grappling with limited access to foreign currency.
Moreover, speculation and hoarding have resurfaced amidst the Naira’s continued depreciation. Many individuals are apprehensive about further devaluation and are stocking up on dollars, anticipating a surge in exchange rates. This behavior further strains the forex market and exacerbates the Naira’s plight.
Nigerian Naira’s Ongoing Depreciation Against the US Dollar Sparks Concerns
In essence, the Naira’s depreciation reflects broader challenges within Nigeria’s forex market, including inefficiencies in the CBN’s intervention strategies and persistent speculation. Addressing these issues will require concerted efforts from regulatory authorities and market participants to restore stability and confidence in the currency.
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