Naira Sinks to 420 a Dollar, Following Weak Economic Data

The persistent increase in the demand for the dollar has pushed the Naira to an all-time low of N420 against the United States dollar at the parallel market.

The local currency which traded at 418 on Tuesday, rose to 420 a dollar after the National Bureau of Statistics report showed that the economy contracted for the third consecutive quarter in the second quarter of the year, and declared “in recession.”

While some foreign investors have expressed interest in the economy, and reportedly invested about $320 million in Naira assets, experts have said the series of negative data released by the National Bureau of Statistics will likely force them to hold back henceforth.

The report showed that the economy growth rate dropped further from -0.36 percent recorded in the first quarter to -2.06 percent in the second quarter, while consumer prices that measures inflation rate jumped to 17.1 percent in July from 16.5 percent in June.

It also revealed that the national unemployment rate had increased from 12.1 percent to 13.3 percent, and that investment inflows plunged to the lowest level of $647.1 million from $710 million.

However, Bureaux de Change operators are optimistic that the decision of the central bank to license 11 international money transfer operators will address the dollar shortfall and complement the CBN intermittent intervention in the interbank market.

“Depending on the effective implementation of the central bank’s policy, the appointment of new international money transfer operators will ensure that banks will have more dollars to sell to bureaux de change and provide the needed liquidity in the market,” the President, National Association of Bureaux de Change Operators of Nigeria, Aminu Gwadabe, told Reuters on Wednesday.

Consequently, the Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu said the economic by NBS also indicated that the second half of the year would better than IMF had predicted.

Besides the growth recorded in the agriculture and solid mineral sectors, the Nigerian economy in response to the policies of the Buhari presidency is also doing better than what the IMF had estimated with clear indications that the second half of the year would be even much better, he said.