As of the time of filing this report, the Nigerian naira has dropped to a record low of N945 per dollar at the parallel market.
The Nigerian naira has continued to slump
against dollar two months after the central bank moved to a more flexible
exchange rate to encourage inflows.
Banks are unable to come up with the dollars
to meet demand, and buyers are increasingly turning to the black market,
widening the gap between the official exchange rate and the price on the
street.
Data from FMDQ showed that the naira opened
at N757 per dollar on Thursday at the official market but traded much weaker at
N945 per dollar at the black market.
This brings the gap between both rates to
N188, the widest since the central bank moved to a more flexible exchange rate.
To close the gap between both rates Ayo
Teriba, CEO of Economic Associates (EA) urged the CBN to give BDCs same access
as banks for fair competition, and should reconsider its list of 43 ineligible
forex items, making them eligible
"The CBN must be prevailed upon to allow
BDCs equal access as the banks to ensure adequate competition that is needed
for a unified rate, and the list of 43 legitimate items currently tagged
ineligible for forex by the CBN must be made eligible if we truly want to unify
the rate."
He reiterated the importance of reconsidering
the list of 43 forex items back on the official market market.
"In which you are diverting transactions
to some other 'window' where a different rate will prevail. We either walk the
unification talk or continue to autocratically exclude legitimate players and
legitimate transactions and perpetuate the multiple rates," Teriba stated.
The unification of the foreign exchange was
to simplify the system and boost dollar inflows. This move caused the official
exchange rate to drop by 40 percent, briefly aligning with the black market
rate. However, due to the ongoing imbalance between dollar supply and demand,
the gap has continued to widen.
Ibrahim Tajudeen , chief economist at
ChapelHill Denham said that the depreciation and gap in both rates is as a
result of low liquidity in the market.
"There is no liquidity in the market and
demand is rising, you will always find a gap when there's no liquidity,"
he said.
He said "I think it can get worse, when
schools resume and people have to pay school fees abroad."
Tajudeen said that the economic fundamentals
do not support the current value of naira at the parallel market and the
solution is to increase inflows.
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