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FX scarcity: Naira slides to N480/$1 on parallel market

The scarcity of dollars at the parallel market led to the naira dropping to N480 per dollar in Lagos yesterday from N475/$1 rate that the local currency traded at throughout last week. The foreign-currency shortage has worsened in recent weeks leading to lenders not honouring card payments, foreign investors having difficulty getting their money out and manufacturers being unable to import vital raw materials.

Lenders including Guaranty Trust Bank Plc, Nigeria’s biggest by market value, have cut the amount of foreign currency customers can spend on payment cards abroad to $100 a month from $3,000. Yesterday, the lender announced that payment of dividends to holders of its Global Depository Receipts (GDRs) has been delayed due to difficulties in sourcing dollars.

GT Bank said in a note to GDR holders that its registrar – which maintains lists of bond and shareholders – was in a queue with the Central Bank of Nigeria (CBN) for dollars to make the payout. According to Reuters, GT Bank declined to comment on the size of the dividend to be paid to holders of its GDRs, which are traded in London.

It issued the GDRs in 2007 to raise $750 million. It paid out a total dividend of 2.80 naira per share in 2019. With the price of oil, the commodity that accounts for over 90 per cent of the country’s export earnings, depressed and foreign exchange reserves dwindling, the CBN is hanging on to dollars to support the naira – leaving a shortage of hard currency supply for investors and importers. Trading at the Investors and Exporters’ (I&E) window saw the naira closing at N385.98 to a dollar as investors traded a total of $20.27 million The naira, however, was sold at N380 to a dollar at the official window.

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