Naira Further Drops to ₦230 against 1 Dollar

Barely 10 days after the CBN stopped forex sale to importers of rice, textile and 39 other items, the naira on Wednesday crashed to 230 against the United States dollar at the parallel market, down from 218 recorded on June 23 when the new forex rule was introduced.



The policy, which has pushed huge forex demand from the interbank (official) market to the parallel (black) market and the Bureau de Change retail segment, has led to artificial scarcity of dollar and other major foreign currencies as operators now hoard them in anticipation of higher prices.



The naira had fallen to 220, 223, 226.5 and 228 against the dollar in the past one week.

According to Nigerian Eye, Black market and BDC operators, are of the opinion that serious dollar liquidity squeeze was already hitting the market and operators were no longer in possession of huge stock of forex to meet rising demands, especially from the importers of the banned items.

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Using the CBN figures, analysts had estimated that about $5.7bn quarterly forex demand was being transferred from the official interbank market to the black market.

“The situation is getting critical now. There is serious dollar liquidity squeeze in the market now. The demand is overwhelming and both the black market and the BDC segment can no longer meet the demand,” a black market operator told our correspondent on Wednesday. 

“The market is very volatile now as a result of the restrictions placed on about 41 items by the central bank. Most importers are now patronising the parallel market to source their dollars,” the head of a BDC, Mr. Harrison Owoh, told Reuters on Wednesday,.Meanwhile, the Association of Bureau De Change Operators has written to the CBN asking it to intervene in the dollar scarcity in the parallel market and the BDC segment to save the naira from crashing further.

Meanwhile, the CBN has reminded dealers and banks that their dollar cash sale for six items, including schools fees, insurance premium, basic travel allowance and monthly mortgage should not exceed $5,000.

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In a new circular dated July 1, 2015, the CBN also warned banks not to sell forex to the importers of the 41 items that were banned from the forex market last week.

Nigerian Eye

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