Persistent dollar scarcity amid devaluation and economic uncertainties plunged the Nigerian Naira to N502 per U.S Dollar at the parallel market, popularly known as the black market.

The local currency traded at N715 to a British Pound and N605 to a Euro on Wednesday morning.

At the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology (NAFEX), the Naira opened at N411.15 to a United States Dollar before dropping to as low as N421.96 and eventually closing at N411.5.

The Central Bank of Nigeria had adopted the NAFEX rate as the nation’s official rate when it became clear that the apex can no long sustain Naira’s fixed-rate amid dwindling foreign reserves and weak revenue generation.

The NAFEX rate, popularly known as the Investors and Exporters Forex Window, was quoted as N410.15 to a United States Dollar on Tuesday, June 8, 2021 on the central bank’s official website.

The apex bank decision to devalue the Naira despite the ongoing economic challenges in Africa’s largest economy was because of the pressure from the World Bank and the International Monetary Fund, demanding the federal government to allow forces of demand and supply to determine the naira exchange rate against pegged Naira-USD rate.

However, with the Federal Government looking for approval from the two multilateral institutions for fresh loans, it became necessary to enforce those demands before new loan applications could be approved.

The World Bank raised Nigeria’s growth rate from 1.1 percent to 1.8 percent in 2021, saying a series of structural reforms and market-determined exchange rates will help boost economic activities.

Also, oil prices were projected to remain high in the near term.

The Nigerian Naira improved slightly against the United States Dollar to N410 on Thursday, according to the latest update on the website of the Central Bank of Nigeria (CBN).

The apex bank had listed the Naira-US Dollar exchange rate at N410.25 to a United States Dollar on Wednesday following the adoption of the NAFEX rate as the official rate.

However, on Thursday the now official rate has been updated to N410 per U.S Dollar, indicating an improvement of N0.25 from N410.25 on Wednesday.

On the NAFEX – FMDQ Group managed window, the local currency closed at N411 to a United States Dollar on Friday, against the N411.50 it exchanged on Thursday.

At the parallel market, popularly known as the black market, the Naira exchanged at N495/$, and N690 and N595 to a British Pound and Euro, respectively.

The Naira plunged against global counterparts immediately the apex bank adopted the NAFEX rate and devalued the Naira by another N31 from N379/$1.

Experts have criticised the move, saying the decision will drag on the nation’s economic productivity and worsen the fragile state of the ongoing economic recovery.

The Nigerian Naira plunged to N493 against the United States Dollar on Wednesday at the parallel market, popularly known as the black market, following the Central Bank of Nigeria‘s decision to devalue the local currency again.

The apex bank had replaced the official exchange rate of N379/$1 with NAFEX rate of over N410/$1 to further unify the nation’s foreign exchange rates and ease the pressure on dwindling foreign reserves.

While criticism trailed the decision given the current situation in the country, persistent dollar scarcity occasioned by weak foreign revenue, speculators and hoarders that operates at the nation’s black market section of the forex plunged the Naira against global counterparts on Wednesday.

Against the British Pound, the Naira traded at N688 and N592 to a single Euro.

At the NAFEX window, the local currency exchanged at N411.50 to a United States Dollar. Investors traded $471.85 million during the trading hours of Wednesday.

Weak foreign revenue generation amid fragile growth and escalating inflation rate continues to hurt the Nigerian Naira and the central bank’s ability to defend the embattled local currency.

According to the monetary policy committee, even though “the economy had successfully exited the recession, the recovery was very fragile given that the GDP of 0.51 per cent was still far below population growth rate. Committee, therefore, was of the view that, there is a strong need for the Monetary Authorities to consolidate on all administrative measures taken not only to rein in inflation, but also on the actions so far taken to grow output.”

The committee left interest unchanged to stimulate growth and said the measures put in place by the central bank will help ease rising inflation as seen in April.