Naira Slides to N412 on Monday as Scarcity Deepens

• Naira Slides to N412 on Monday as Scarcity Deepens

The Nigerian Naira slid against the US dollar on Monday following the suspension of the US dollar sales to the Bureau De Change operators across the nation for two weeks.

The central bank had adjusted the Naira exchange rate to the US dollar from N360 to N380 to reflect current economic changes due to coronavirus pandemic.

However, the suspension of dollar sales to BDCs created scarcity at that forex segment to further extend the exchange rate of Naira/$1 to N412.

This was despite the decline in demand of the US dollar due to almost zero traveling, shut down of business operations in key states and disruption in the global supply chain.

Investors, in London, doubted the ability of the apex bank to sustain the new foreign exchange given the nation’s weak economic fundamentals from weak oil prices, low foreign reserves, weak healthcare industry to unclear economic path. Therefore, they have started exchanging the naira at N515/$1 at a forex forward market in London.

Meanwhile, the uncertainty surrounding the nation’s economy remains high as the total number of confirmed cases of coronavirus rose to 135 on Tuesday, according to the Nigeria Centre for Disease Control (NCDC).

The surged in risk associated with emerging economies like Nigeria weighs on the nation’s outlook, therefore, hurting foreign direct investment despite the Central Bank led monetary policy leaving interest rates unchanged to sustain capital importation needed to complement low revenue generation.