The Nigerian Naira on Thursday plunged to 400 against the US dollar at the parallel market as forex scarcity continued to impact economic activities in the nation.
The local currency closed at 315.06 against the US dollar at the interbank market on Thursday, losing about 11.3 percent since the new forex flexibility policy was implemented in June.
Experts have attributed the continuous depreciation in the Naira value to the shortage of forex in the country and the inability of the Central Bank of Nigeria to prop up the Naira value at the interbank market as envisaged in its 13 forex guidelines two months ago.
“As far as you continue to have some 41 items banned from the interbank market, importers and manufacturers of those items will continue to seek for forex at the parallel market. The issue still has to do with inadequate forex supply.” said Mr. Kunle Ezun, a currency analyst at Ecobank Nigeria.
However, the National President of the Association of Bureau De Change Operators, Alhaji Aminu Gwadabe said the situation could be linked to the activities of some speculators.
“The naira is falling at the parallel market because there is scarcity at the interbank market. This fall could be due to the activities of genuine manufacturers or some people you cannot identify. These are people who have stored naira somewhere and are seeking to convert them to dollars,” said Sherrifdeen Tella, a Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye.
While, a Foreign Exchange Research Analyst at Investors King Ltd., Samed Olukoya said “if the activities of the parallel market is not checked, it would pressure consumer prices even more and pushed inflation to around 20 percent in the second half of the year.”
This he said will worsen the current situation as the recent increase in interest rate by the monetary policy committee to 14 percent will likely increase the unemployment rate and subsequently lower consumer spending as businesses look to downsize to cut costs.