Currency crashes to N373/Dollar on parallel market

The Naira however closed at 292.90 to the dollar on the interbank rate after just one transaction was carried out, with dollar supply drying up and the CBN not intervening, traders said.

The Nation reported that traders had expected the CBN to intervene to ease the dollar shortages, but that did not happen as the currency sunk to record lows.

The naira’s free fall has come as a surprise to many stakeholders, who think that the new flexible forex policy introduced by the Central Bank of Nigeria (CBN) would have stabilised the currency.

Aminu Gwadabe, president of the Association Bureau De Change Operators of Nigeria (ABCON), said commercial banks were playing big in the parallel market, manipulating naira rates against the greenback.

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According to the report by The Nation, Gwadabe said that most lenders keep two books – one for the official rate and the other for dispensing dollar in the parallel market.

“Demand at the parallel market is rising seriously. The banks are now playing big in the parallel market and there is basically no operating rules in the market. It is a market of who is who controlled by the banks,” Gwadabe said.

The BDC chief called on CBN Governor Godwin Emefiele, asking him to call an emergency meeting of all stakeholders on the fate of the local currency. This is the only way out, he said, because “things are getting out of hand” as the market liquidity has dropped.

Nigeria has been grappling with a currency crisis since international crude oil prices dropped by 43 per cent from an average of $100.35 throughout 2014 to an average of $57.20 for the first six months of last year. It is now around $48.09 per barrel.

More importantly, the drastic fall in the price of crude oil, which constitutes the largest component of Nigeria’s forex reserves, has cut dollar earnings from about $3.2 billion monthly to about a billion dollars for the same period and this has negatively impacted on the value of the naira.

“Most investors would like to see a more liquid forex market before resuming purchases of local assets,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank, according to Nigeria CommunicationsWeek.