By Odunewu Segun
Just as the naira slumped to a new all-time low of N472/$ at the parallel market, a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, has said the naira might hit 500 against the dollar in the coming days. He said the volatility in the market will continue as long as the 41 items excluded from the official forex market remained banned.
He explained, “The only way out is when there is dollar inflow into the market, and this is one of the reasons the CBN says it is not willing to cut the Monetary Policy Rate now. The idea is that why you are still trying to woo foreign investors into your fixed-income market, you should continue to be able to assure them of returns on their investment.
“So, if liquidity is high, we will see it in the parallel market. But as we speak today, there is no liquidity in the market, and that is why we keep seeing that volatility in the parallel market.”
Noting that the naira had been relatively stable in the official market, Ezun said, “But the parallel market will always respond to liquidity, which is not available. The parallel market will help you to assess the level of liquidity in the market.
ALSO SEE: Naira plummets to N460/$ at parallel market
Meanwhile, the President, Association of Bureau de Change Operators of Nigeria, Alhaji Aminu Gwadebe argued that no bank is dispensing dollars to the BDCs, and this has also aggravated the volatility crisis. “The BDCs accounts were debited by some banks since Monday and they are not able to pay any of the BDCs so far debited by them. This is really sending bad signal in the market”
National Daily gathered that dollar liquidity remained a major challenge in the market amid surging demand pressure on the greenback by parents paying schools fees of their children studying overseas as well as travelers.
The local currency stood at 452 to the dollar at the close of trading on Tuesday, down from 445 against the greenback on Monday, while it closed flat at 312.99 against the dollar at the interbank market on Wednesday, according to data from FMDQ OTC Securities Exchange.