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.
Bureaux De Change Association Warns Against Hoarding of US Dollar, Says Speculators will Lose
The Association of Bureaux De Change Operators of Nigeria (ABCON) on Sunday warned currency speculators and hoarders of impending losses if they do not desist from creating bogus foreign exchange rates for personal gain.
In a statement titled, “ABCON warns speculators will lose money as CBN has enough reserves to fund market, defend naira”, the association said speculators and hoarders are taking a huge risk as the Central Bank of Nigeria has enough liquidity to defend the Naira and maintain stability against global foreign counterparts.
This is coming few days after the local currency plunged to N484 to a United States dollar and N620 against the British Pound at the black market due to the rising demand and persistent scarcity that most hoarders interpreted as lack of financial muscle on the part of the central bank, especially if the nation’s falling foreign reserves is factored in.
However, ABCON said with about $36 billion foreign reserves, the Central Bank of Nigeria has the necessary means to punish speculators and hoarders they described as enemies of the nation.
President of ABCON, Alhaji Aminu Gwadabe, explained that the central bank is working to unify the nation’s foreign exchange rates and eliminate past challenges that have made market determined forex rates almost impossible.
He said “I think that the CBN by pushing the official foreign exchange rate from N306 to N379 to the dollar is in line with market demand.
“It has also helped to narrow the official-parallel market rates gap that formed the basis of ridiculous speculations among unpatriotic forex dealers and spectators.”
Gwadabe, however, advised the Federal Government to improve security surveillance at the nation’s land borders to checkmate illegal foreign currency cash deals.
He also asked the central bank to raise liquidity ratio of bureau de change operators to discourage dollar holdings.
Forex Scarcity Plunges Naira to N620 Against British Pound
Naira Exchanges at N620 to a British Pound at Black Market
Lingering foreign exchange scarcity has plunged the Nigerian Naira to a record-low of N620 against the British Pound at the black market.
The declined by a record N14 from the N607 it exchanged to a single British Pound on Thursday to N620 on Friday, signaling rising demand for forex amid persistent scarcity.
Experts have attributed the surge in demand to the usual push for the end of the year sales by importers and businesses looking to close the sales gap created by the COVID-19 lockdown.
The local currency plunged against global counterparts by the most in recent months on Friday. The Naira declined by N13 against the European common currency to exchange at N570.
Similarly, the Naira lost another N4 against the United States dollar to exchanged at N484, further down from N480 it was sold on Thursday.
Experts are predicting further decline for the Nigerian Naira, largely due to the weak macro fundamentals, overexposure to crude oil uncertainty and US Dollar.
US Dollar Gains Against the Nigerian Naira to US$/N480
The United States Dollar continues its bullish run against the Nigerian Naira on the black market on Friday.
The American Dollar gained N5 against the Nigerian Naira to exchange at US$1 to N480 across key black markets in Nigeria.
The US Dollar has been on a bullish run since COVID-19 pandemic plunged oil prices and distrupted Nigeria’s foreign revenue generation at a time global supply chains were grounded and economies shut to curb the spread of ravaging COVID-19.
The Central Bank of Nigeria devalued the Naira twice to accommodate the nation’s new reality and ease pressure on the weak foreign reserves, still rising capital flight among foreign investors looking to exit the economy and weak foreign direct investment impedes the apex bank’s ability to service the economy with enough US dollar.
Therefore, persistent scarcity due CBN’s failure to supply enough liqudity in an economy that depends on import for almost 90 percent of its consumption plunged the Naira value in recent months.
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