Nigeria’s economic woes worsen as naira continues freefall, now N440/dollar

By Odunewu Segun

The naira, which closed at N436 to a dollar on Thursday, eased to N435 in the early hours of Friday, again hit the roof on Sunday, exchanging for N440 to a dollar at the parallel market.

At the interbank market, the naira closed at 307.79 on Friday. It closed at 307.25, 311 and 312 on Tuesday, Wednesday and Thursday respectively, according to data posted on the FMDQ OTC platform.

“There is shortage of dollar supply. Diaspora remittances have dropped. This is why you can see the rate dropping at the parallel market,” an economic analyst and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said.

The development came amid depleting external reserves, which stood at $24.8bn last Monday.

The latest data posted on the CBN website showed that the foreign exchange reserves were down by 3.4 per cent from a month ago to its lowest level in more than 11 years, as the apex bank sells the greenback at the interbank market to support the naira.

According to the Association of Bureau De Change Operators of Nigeria, the naira may likely recover this week as a result of the introduction of Travelex, a licensed forex dealer. Travelex, an international money transfer organisation, would begin to distribute forex to the BDC operators on Monday (today).

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The President, ABCON, Alhaji Aminu Gwadabe, said the forex distribution would be efficient and uniform across ABCON members, unlike what was obtainable in the past. According to him, Travelex has the technology to sell forex to about 1,000 BDCs in a couple of hours, which is a major advantage.

The latest declines in the naira value started on Wednesday, a day after the Central Bank of Nigeria’s Monetary Policy Committee retained the benchmark lending rate at 14 per cent.

The MPC had after its two-day bi-monthly meeting left the Monetary Policy Rate unchanged, rebuffing calls for rates cut by analysts, stakeholders and some government officials, including the Minister of Finance, Mrs. Kemi Adeosun.