Over the weekend, the depreciation of the naira persisted as it traded at N1,510 against the dollar in the parallel market and N1,466.31 in the official market. This marked a notable increase of N40 in the dollar-to-naira exchange rate from Thursday to Friday, with the rate closing at N1,426 on Thursday, as reported by the National Autonomous Foreign Exchange Market (NAFEM),Daily Trust reports.
Despite recent efforts by the Central Bank of Nigeria (CBN) to stabilize the naira through reforms and interventions, including supplying dollars to Bureau De Change (BDC) operators to enhance liquidity, the currency had previously strengthened against the dollar, trading below N1,000.
However, the trend reversed, with the dollar reaching N1,510 at the black market by the close of Friday, attributed to increased demand and insufficient dollar supply, according to a Bureau De Change operator.
The CBN had sustained its sale of dollars to registered BDC operators, including offering dollars at a discounted rate of N1,021 per dollar in April 2024, as part of measures to stabilize the naira. Previous interventions included selling dollars to BDCs at various rates, including N1,301/$ and N1,251/$.
Despite these efforts, the naira’s value declined, leading to it being rated as the worst-performing currency globally over the past month. BDCs highlighted the scarcity of dollars and advocated for amnesty for hoarders of foreign currencies to improve liquidity.
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, emphasized the need for increased dollar supply and suggested amnesty for currency hoarders to mitigate the crisis.
Experts identified supply-demand imbalances as the root cause of the naira crisis, stressing the importance of consistent supply to build confidence in the market. They also recommended the need for a stabilizing framework for the exchange rate and emphasized the importance of boosting oil production to leverage current oil prices.
Additionally, economists emphasized the necessity for the CBN to trace the sources of foreign currency to address illicit inflows, as interventions thus far have only addressed surface-level issues without tackling the underlying problem.
