- Naira Exchanges at N410 Per Dollar on Thursday
The Nigerian Naira declined against the US dollar on the parallel market on Thursday as businesses fear the Central Bank of Nigeria could devalue the local currency to halt falling foreign reserves.
The broad-based slowdown in global growth amid fast-spreading coronavirus is dictating Nigeria’s economic standing, especially with low global oil prices.
Experts predicted that low oil prices would hurt the nation’s ability to generate revenue in 2020 and fund its N10.59 trillion budget for the year.
The federal government had benchmarked crude oil at $57 per barrel for the year while oil is presently trading at $33.27 per barrel, representing a decline of $24 per barrel.
According to traders, speculators have started hoarding the US dollar as they are projecting a surge in price to around N400 per US dollar. This, experts said could worsen the whole situation given the nature of the economy, a petrol-dollar economy.
Temitayo Sikiru, a business analyst with Investors King, said that is “one problem with us Nigerians, the same thing is happening with Coronavirus when certain persons hike the price of sanitizers due to situational surge in demand, a global pandemic.”
According to Dapo Alade, a software engineer and a social commentator, “everyone wants to take advantage of the news by engaging in panic buying.” He explained that “We have never had a history of devaluation in recent times, hence the rush to take advantage of the situation.”
Investigation revealed that the US dollar was exchanged at N410 at Apapa while it closed at N400 in the Festac area.
JPMorgan had predicted that the Central Bank of Nigeria (CBN) would devalue the local currency by 10 percent against the US dollar in the second quarter of the year if crude oil trades between $30-40 per barrel.
This, the bank’s analyst expects to increase if the price of crude dip to $20-30 from the current level.