The naira fell to a new low on Thursday, closing at N996.75 per dollar in the official market and N1090 per dollar in the parallel market.
The naira’s decline has come as a surprise to many analysts, who had expected the Central Bank of Nigeria’s (CBN) recent move to clear some of its FX backlog will boost confidence in the currency.
The domestic currency depreciated 12.24 percent to close at N996.75 to a dollar at the close of business on Thursday, data from the NAFEM where forex is officially traded, showed.
This represents an N122.04 loss or a 12.24 percent decline in the local currency compared to the N874.71 it closed on Wednesday and a new all-time low. The last all-time low was N993.8 recorded on October 30th.
The intraday high recorded was N1100/$1, while the intraday low was N744.00/$1, representing a wide spread of N356/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $228.54 million, representing a 101.32 percent increase compared to the previous day.
Similarly, the naira weakened at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 5.5 percent, quoted at N1090/$1, while peer-to-peer traders quoted around N1110.10/$1.
Analysis suggests that the official and parallel market exchange rates are nearing parity. The gap between the official rate and the black market rate has narrowed to approximately N100, which is close to a 10 percent premium, a margin that is generally considered acceptable.
Meanwhile, amid the rising free fall of the Naira both at the official Nigerian Foreign Exchange Market (NAFEM) and the unofficial market, financial experts had called on the Central Bank of Nigeria (CBN), to de-dollarise the economy by declaring any local transactions in US dollars illegal.
Speaking on strategies that can be used for the naira to regain strength, the founder and chief consultant of B. Adedipe Associates Limited (BAA Consult), Dr. Biodun Adedipe, said the CBN should stop government agencies from charging local operators and entities in US dollars.
According to him, the sale of crude oil to local refineries should also be made in Naira rather than in US dollars.
Adedipe said: “CBN should deal transparently with participating banks at the I&E Window. De-dollarise the economy by declaring as illegal any local transactions in US dollars (sale of assets, rent/leases, and other services, including school fees and medical bills) and ensure that government agencies stop charging local operators and entities in US dollars (quite common in the maritime sector).
“Other suggestions include the need to ensure that the sale of crude oil to local refineries should be made in Naira rather than dollar. “
“President Bola Tinubu, should have a direct engagement with bank CEOs to generate ideas and use moral suasion to enlist their support for the market reforms. Face the reality that unified exchange rates (not any different than floating the Naira) is a poor policy choice for a structurally defective and weak economy like ours,” he added.
Nairametrics earlier reported that the Association of Bureau de Change Operators of Nigeria had warned those speculating against the naira to be wary.
The President of ABCON, Aminu Gwadabe gave the warning and noted that the Central Bank of Nigeria was set to inflict pain on currency speculators.
“What is happening in the market and the continuous naira rebounds are the manifestations of the CBN double-edged sword measures of dollar liquidity injection and naira mopping through the instrumentality of interest rates hikes.
“It is a good development as it is the greatest risk to speculate, hoard, and substitute naira for other currencies,” Gwadabe declared.
(Nairametrics)