The dollar traded at 600 naira on the parallel market on Monday, raising fears of further devaluation of the national currency.
The counter rate for importers and exporters, however, was 415.75 naira on Monday, widening the exchange rate gap to 184.25 naira.
In Zone 4 of Abuja, which is the parallel market hub in the Federal Capital Territory, two bureau de change operators, Mohammed Isa and Abu Abdullahi, said The punch that the rate was N/$599 at 10 a.m. and 11:14 a.m. respectively.
However, the rates of the two BDCs rose to N600/$ when contacted separately at N3.13pm and N5pm respectively on Monday.
“If I reduce this by N1, I will not be able to make any profit,” said one of the two BDCs, Abu Abdullahi.
At Lagos airport on Monday, a BDC operator, Adamu Haruna, told The PUNCH the fare was “N600/$, no more, no less”.
A BDC operator at Amuwo-Odofin in Lagos, Bala Usman, gave an initial rate of N/$598 in the morning but rose to N599 at 2:53 p.m. when contacted.
“The demand is growing and the dollar is very scarce now,” he said.
The naira weakened in the parallel market due to increased speculation, falling external reserves and weak foreign exchange inflows into Africa’s largest oil producer.
The country’s external reserves fell by $313 million in March, according to figures obtained from the Central Bank of Nigeria.
Politics is also a key factor, as experts see politicians mopping up dollars for election primaries this month.
The President of the Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, said The punch that the situation was caused by several factors, including the election, loss of confidence and demand/supply.
“It’s a market where demand and supply determine the price. Remember that election years are associated with currency volatility, coupled with a shortage of supply. External reserves, inflation, cost of inputs and the Russian-Ukrainian war are also key issues,” he said, saying there was indeed a loss of confidence, saying that “once that people will see the exchange rate rise, confidence will also fall.” .”
Director of Research and Strategy, Chapel Hill Denham, Mr Tajudeen Ibrahim said The punch that the problem in the foreign exchange market could be attributed to the decline in foreign reserves and the uncertainty of the economy.
“The parallel market is speculative. One of the causes is foreign exchange reserves. Secondly, there is no indication that Nigeria is going to see an influx of foreign currency that can support foreign exchange reserves anytime soon,” he said.
“There is nothing like Eurobond. There are no indications for other borrowings, so there is no clear indication of inflows. This is also one of the reasons for what we see in the market,” he said.
He explained that it is possible that the market will see demand related to the election.
He urged the Central Bank of Nigeria to devalue the naira to match the parallel market rate, while managing the market to ensure unforeseen circumstances did not arise.
For his part, the Director General of the Center for the Promotion of the Private Sector, Dr. Muda Yusuf, urged the CBN to float the exchange rate market to bring clarity to investors and allow the market to be determined by the forces of demand and supply. .
Yusuf said the CBN’s current approach would continue to worsen distortions in the economy, perpetuate back and forths, fuel speculation and suppress the currency supply.
On the other hand, Nigeria is a deeply import-dependent economy, depending on crude oil for more than 80% of foreign exchange.
Inputs from the non-oil sector are still 10-20% and most export products are raw materials and agricultural products.
The Manufacturers Association of Nigeria said only a strong manufacturing sector could increase the country’s productive capacity, reduce imports and increase foreign exchange inflows from non-oil exports.
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