Naira in free-fall, sells N280 to $1 at parallel market

The Nigerian currency on Monday depreciated further at the parallel market, following implementation of the Central Bank of Nigeria’s downward review of foreign exchange sales to Bureau De-Change.

The CBN had earlier reviewed downward the 150,000 dollars offered weekly to BDCs to 10,000 dollars, while the number of licensed operators was reduced to about 1,000 from 4,000.

At the close of trading late Monday afternoon, the naira depreciated by N3 or N280 to dollar, compared with N277 it closed on Friday.

The naira’s deep swing was also visible against other international currencies as one pound sterling and one euro were exchanged at N490 and N290 respectively.

The official exchange rate across the commercial banks remains at N197 to the dollar.

Most of the parallel market operators attributed the scarcity of the foreign exchange to the CBN’s policy review and limited earnings from crude oil.

A currency dealer in Lagos, Salisu Ahmad, said the naira depreciation followed limited supply of foreign exchange and a vacuum created by a CBN policy.

“The supply of foreign exchange has been limited since the first week of the year and the demand for dollar and other international currencies is very high.

“So what we are witnessing is that some operators are taking advantage of the situation,” Mr. Ahmad said.

Another parallel market operator, Kakia Mohammed, said further depreciation of the naira could be linked to the commercial banks’ recent offering of lower denominations of dollars to customers.

“Commercial banks’ approach has also pushed numerous customers to chase limited foreign exchange available to BDC operators,” said Mr. Mohammed.

He also said some dealers had induced the artificial scarcity by refusing to sell foreign exchange on the speculation of a possible monetary policy by the CBN during the week.