The lingering acute shortage of foreign exchange in the country appears to be worsening as the local currency continued its downward slide on the parallel market, dropping to N484/$1 Friday from N478/$1 and 470 per dollar on Wednesday and last Friday respectively.
Data obtained from “Abokifx,” a website that tracks forex rates on the parallel market Friday, showed that although trading had opened earlier in the day with the naira at N480/$1, it depreciated against the greenback to close at N484/$1.
The naira has been under pressure on the parallel market since the beginning of the year, due to foreign exchange scarcity occasioned by the slump in the price of oil (the commodity that accounts for about 90 per cent of Nigeria’s export earnings).
However, after rebounding from N477 per dollar to N440/$1 in early September, following an announcement by the Central Bank of Nigeria (CBN) that it would resume the sale of dollars to Bureaux De Change (BDCs) on September 7, the naira gradually weakened to between N460/$1 and N463 per dollar on the parallel market.
The CBN had in March suspended its weekly sale of forex to the BDCs due to the suspension of international flights and other coronavirus containment measures announced by the Federal Government.
Analysts had predicted that the resumption of forex sales to the BDCs would not be sufficient to bolster the naira, especially on the parallel market, due to the back-log of unsatisfied demand for dollars and rising demand for forex, caused by the increase in economic activities in the wake of the gradual lifting of coronavirus restrictions.
Still, until last week, the naira/dollar (N/$) exchange rate had remained largely flat on the parallel market at between N461 per dollar and N463/$1.
Analysts attribute the naira’s weakening to the yearly Christmas season import bill pressure, which usually starts around this time of the year and disappears in January.
A forex dealer, who did not want to be named, told New Telegraph that despite the CBN’s interventions in the official forex window only very few importers are able to access dollars, thus pushing them to the parallel market and increasing demand for forex in that segment of the market.