Naira Falls to N475 Against US Dollar on Black Market
The Nigerian Naira continues to fall against its global counterparts despite efforts to prop up the local currency value.
The local currency plunged by N3 from N472 it exchanged against the US dollar on Friday to N475 on Monday on the black market. Its lowest in over four years.
This continues against the British pound as the Naira lost N2 to N584, further down from N582 it was sold on Friday.
Against the Euro single currency, the Naira lost N5 from N530 it was traded on Friday to N535 on Monday.
On the Investors and Exporters Forex window, the Naira plunged from N381 per US dollar stipulated by the Central Bank of Nigeria to N389.25/$.
Investors traded $38.86 million on Monday, representing more than 100 percent increase from $12.61 million it traded on Friday.
Lack of dollar liquidity due to falling foreign reserves and low oil prices continues to dictate the Nigerian Naira value.
As stated on this platform, the central bank is gradually losing its power to defend the Naira at the current rate to the US dollar and other global currencies. This was why the currency was devalued twice in the last five months to better accommodate changes in macroeconomic data.
This we expect to continue, especially without COVID-19 cure and rising global uncertainty due to the US-China trade conflict.
Forex Scarcity Weighs on Manufacturing Sector
Manufacturing Sector Suffers from Lack of Dollar Liquidity
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, has said lack of dollar availability continues to weigh on the manufacturing sector in the first half of the year as the sector recorded its third consecutive month of contraction in the month of July.
According to Yusuf, several manufacturers had to source for forex on the black market, increasing scarcity on the already stressed section of the forex even more. This, other experts have blamed for the high Dollar-Naira exchange rate on the black market.
On Monday, the Naira was exchanged at N473 to a US dollar on the parallel market popularly known as the black market. The local currency gained N2 from the N475 it was exchanged before the Sallah holiday to N473 on Monday when the market opened.
“Across, practically, all sectors, we are experiencing cost escalation, loss of credit lines enjoyed from foreign creditors, forex remittance challenges and many more. We need an urgent response from the CBN to calm the situation and restore confidence in our foreign exchange management framework,” Yusuf stated.
The Lagos Chamber of Commerce and Industry said most of its 2,000 members have been hit by the dollar shortage and wide foreign exchange rate that is presently eroding their profits.
“If the situation persists, it will lead to lay-offs. If you are not producing, there will be a shortage of goods in the market, prices will go up,” he added
Naira Gains N2 Against US Dollar to N473 on Black Market
Naira Gains Against Dollar to N473 on Black Market
The Naira gained slightly on the parallel market, popularly known as the black market, on Monday to exchange at N473 per US dollar.
The local currency traded at N475 to a US dollar on Friday before gaining N2 to N473 on Monday.
This is coming on the back of dollar scarcity caused by falling foreign reserves and low oil prices.
Against the British Pound the local currency declined by N5 from N585 it traded on Friday to N590 on Monday.
This continues against the Euro single currency as the Naira depreciated by N2 to N542, down from N540 it traded on Friday.
On the Importers & Exporters Forex window, the Nigerian Naira exchanged at N389.25 against the United States dollar, slightly below the N388.33 it opened on Monday.
Investors traded $18.83 million during the trading hours of Monday on the I&E FX window.
The Central Bank of Nigeria’s exchange rate remains N381 to a United States dollar.
The apex bank had adjusted the local currency foreign exchange rate twice in the last few months to ease the pressure on the nation’s dwindling foreign reserves.
Still, the inability of the apex bank to improve the supply of the US dollar into the economy continues to weigh on the Naira value and general economic activities.
Naira Remains Under Pressure, Slides to N580 Against British Pound
Naira Slides to N580 Against British Pound, Remains Under Pressure
Naira continues its downward trend against global counterparts this week as the Central Bank of Nigeria fails to up forex liquidity.
On the parallel market, popularly known as the black market, the local currency exchanged at N580 to a British Pound, represents N4 decline from N578 it traded on Wednesday.
This decline continues against the Euro single currency as the Nigerian Naira remained under pressure at N530, its lowest against the European common currency in years.
The Naira has been under pressure since global oil prices plunged below $100 per barrel in 2014 under the previous administration.
However, failure to diversify the economy despite years of oil exportation has left Africa’s largest economy grappling for survival each time oil prices took a hit in the global market.
Nigeria, an oil-dependent economy, has had to depend on borrowing to fund most of its budget year after year, leading to high debt service-to-revenue ratio of 99 percent. One of the highest in the world despite having one of the lowest debt to GDP ratios in the world.
The International Monetary Fund (IMF) recently said Nigeria does not have a debt problem but a revenue collection issue. The IMF explained that at about 7 percent tax-to-GDP ratio, the nation has one of the lowest tax-to-GDP ratios in Africa and the world at large.
While advising against raising tax during this tough period of COVID-19, the Fund advised the Federal Government to improve revenue collection efficiency to ease rising debt burden and increase economic activities.
Naira’s outlook remained weak in 2020 and expected to remain largely under pressure for the most part of 2021, going by Investors King’s projection and available economic fundamentals.
Meanwhile, the Naira exchanged at N388 to a US dollar on the Investors and Exporters Forex window on Thursday as turnover volume traded by investors plunged to $12.61 million.
The central bank official rate for investors and exporters remain N381, raised from the previous N361/$.
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