With the continued scarcity of the dollar and Central Bank of Nigeria decision to cut dollar sales to foreign exchange operators, the naira may hit the N500 mark to the United States dollar at the parallel market next week, experts have predicted.
The naira had tumbled against the dollar to 495 on Monday from 487 last Friday, as acute shortage of the greenback continued to batter the economy and the country’s foreign exchange markets.
Before falling to 487 last Friday, the local currency had consecutively closed flat at 485 for four days in the previous week.
The severe shortage of the dollar has put the naira under persistent pressure at both the official and parallel forex markets. The global crash in the prices of crude oil, Nigeria’s main forex earner, has brought untold hardships on Nigerians.
Economic and financial experts said unless the lingering dollar supply problem abated, the volatility in the exchange rate and the consequent economic challenges might continue.
“The challenge with the forex market is still the supply issue; price (exchange rate) is determined by the interplay of demand and supply,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, had said.
Economic and financial experts expect the naira to weaken further against the dollar in this festive season.
They also argued that the crackdown on the parallel market forex traders and the persistent scarcity of the greenback would make further weakening of the local currency inevitable.
The naira had plunged to 470, down from 455 on the back of a fresh dollar shortage at the official and parallel forex markets.
Dollar shortages have caused many companies to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices of oil, which accounts for over 70 per cent of Nigeria’s budget revenue.
“There is an acute shortage of dollars in the market because of supply being slashed by half to Bureau de Change operators from international money transfer agents, pushing the naira down,” one trader said.
The BDC operators are now getting $8,000 each per week from Travelex against the usual $15,000 each per week.