- Naira Drops to 498 as CBN Resumes Dollar Sales
The naira fell against the United States dollar at the parallel market to 498 on Thursday, from 497 on Wednesday.
This came hours after the Central Bank of Nigeria resumed dollar sales to Bureau De Change operators through Travelex.
Before dropping to 498, the naira had appreciated to 495/dollar early on Thursday.
The currency traded flat at 497/dollar consecutively between Monday and Wednesday.
Economic and financial experts said the resumption of dollar sales to the BDCs by the CBN through Travelex would help boost the naira.
The local currency has been under persistent pressure owing to scarcity of dollar in the economy.
Economic and financial experts are divided over the outlook of the naira and most economists believe the local currency would continue to fall against the greenback unless the CBN reviewed its monetary and foreign exchange policy.
According to an economic expert, Mr. Henry Boyo, the currency monetary policy framework adopted by the CBN is flawed and there is an urgent need for the central bank to jettison it for a framework that can take the country off the current economic challenges.
He stressed that unless this was done, the rising oil prices would not make the economy better.
Boyo said, “The oil revenue is not the problem; the primary cause of the oppressive dilemma is the distortional process the CBN adopts for infusing the dollar revenue into the domestic money market to drive economic growth.
“President Muhammadu Buhari must be disturbed that the naira exchange rate has suffered so poorly under his watch, particularly after he promised parity between the naira and dollar, if he won the election.
He added, “Unfortunately, the worst has yet to come, because, if crude oil price further rises while output remains favourable, the dollar will paradoxically spike well above N500/$1 and may approach N1000/$1 before December 2017!
“Any attempt to bridge the widening gap between official and parallel market exchange rates will devalue the naira and trigger a steep rise in fuel price to shoot inflation well beyond 20 per cent and make Nigerians poorer still.”
“We will continue to see reasonable volatility of the naira during the first half of this year. The fundamental issues underlying the volatility of the naira have not been addressed,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
According to Ezun, the naira will continue to depreciate at the parallel market while the CBN will keep managing the official rate around 305/dollar.
“It will depreciate further but there has been some resistance around 500/dollar. The CBN seems to have come to the end of monetary policy because it is the issue of liquidity,” the Ecobank analyst added.
