Naira slump blamed on speculation
Nigeria’s Naira on Wednesday weakened to 452 per dollar at the parallel market as supply from the BDCs thinned and speculation over devaluation thickened.
Besides speculations by operators, fears over rising foreign debt and declining reserves also strengthened the greenback at the expense of the local currency.
Recall that the Central Bank of Nigeria, CBN resumed foreign exchange sales in at the end of April to commercial banks to sell to customers wishing to pay school fees, and businesses making essential imports as part of efforts needed to revamp economic activities across the country and mitigate the impacts of COVID-19.
Also, read Nigeria’s dollar reserves down by $129.83 million in 7 days
The President, Association of Bureaux De Change Operators of Nigeria, Alhaji Aminu Gwadabe, said the suspension forex sales had no doubt caused speculation, volatility, and spikes in the market.
He said: “Speculators are taking advantage of the fact that the major source of foreign currency liquidity is now foreign debt not petro dollars.
“The CBN and the presidential task force need to extend essential services to BDCs to checkmate the unfortunate behaviours of speculators to save our local currency.
Read more: Nigeria annual inflation up 12.40% in May, highest in 25 months
“Our economy is mostly dependent on imported textiles, refine oil, food, and medicals, among others.
“There is also a need to look beyond traditional sources of foreign inflows of currency liquidity to more germane sources like diaspora remittances and backward integration.”
He added, “The parallel market rate has jumped to N452/$ today (Wednesday) and the trajectory, going forward, is worrisome and disturbing except the BDCs are returned to essential services.”
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