Naira Dips to N480 Against US Dollar

Low foreign exchange continues to weigh on Nigerian Naira on the parallel market popularly known as Black Market.

The local currency declined by N5 from N475 it exchanged on Monday to N480 on Tuesday as forex scarcity dictates the value of Nigerian Naira.

Nigeria’s low foreign revenue generation amid dwindling foreign reserves has disrupted economic activities and impeded manufacturers and other business owners from accessing forex for raw materials or importation of manufacturing components.

Against the British Pound, the local currency depreciated by N5 from N605 it traded on Monday to N610 on Tuesday, further highlighting Nigeria’s precarious position.

In July, JPMorgan pointed to chronic forex shortage in Africa’s largest economy, claiming the Central Bank of Nigeria has over $5 billion forex backlog despite its weak foreign reserves and low oil price.

The central bank has always supported the Naira value by constantly injecting forex into the foreign exchange market to boost available liquidity and deepen economic activities. However, low foreign revenue generation due to low demand for oil and the weak oil price has disrupted the apex bank intervention power.

Naira traded at N550 to the European single currency on the black market on Tuesday, down from N480 it was exchanged a few weeks ago.

The inability of businesses to access forex in an economy that depends on importation for most of its consumption has stalled business activities and plunged job creation.

The National Bureau of Statistics (NBS) said the unemployment rate rose to 27.1 percent or 21.8 million people in the second quarter. The same NBS on Monday reported a further increase in the inflation rate from 12.56 percent in June to 12.82 percent in July.

The persistent increase in price is expected to negatively impact consumer spending, disrupt the retail sector and hurt the economy.