The
Nigerian naira has continued its shambolic performance against the
dollar as it has crashed to a woeful level for the first time.
On Wednesday, the naira exchanged at 382 to 390 against the dollar
at the parallel market as the scarcity of foreign exchange worsened.
This is the worst it has reached since the beginning of the year.
The local currency has been under persistent pressure against the
greenback owing to dollar scarcity at both the interbank foreign
exchange market and the black market.
The shortage of forex at the interbank market, owing largely to
scanty intervention by the Central Bank of Nigeria after the total
floating of the naira, has led to gradual and continued depreciation of
the currency at both markets.
After closing around 378 against the dollar for most part of last
week, the naira dropped to 380 on Friday before falling to 382 on
Monday.
The naira closed at 311.06 against the dollar at the interbank
market on Wednesday. After hitting an all-time low of 334 last
Wednesday, the currency has been hovering around 310 and 330 at the
interbank market.
The local currency had depreciated from 280 to over 300 per dollar after the CBN floated the currency completely some weeks ago.
While linking Wednesday’s fall to the summer rush, economic
analysts said a depreciating naira at the parallel market portend great
danger for the economy.
They argued that since most companies were sourcing forex at the
parallel market due to the scarcity at the interbank market, cost of
goods and services were set to go up further.
“If the naira continues to fall against the dollar at the
parallel market, it means the inflation and the contraction in economic
growth we are experiencing now will worsen,” the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chuwkwu, said.
He added, “Our capacity to defend the naira is getting weaker
and weaker. And like I have said before, we need a budget support
facility of say at least $10bn from the International Monetary Fund to
stabilise the currency. We will need this to calm the market and foreign
investors will have the assurance to come in.
“As it is now, there is no limit the naira will depreciate to
now that the foreign investors will be attracted to come in. We need
stability in the market for them to come.”
An economic analyst and Head, Research and Investment Advisory, Mr.
Sewa Wusu, who linked the depreciation of the naira to the summer rush
by holidaymakers abroad, said, “The issue still bothered on scarcity of forex in the economy.”
He stated that it was high time all critical stakeholders made moves to get the economy back on track.
Wusu said experts must work with the economic managers and other stakeholders to chart the path to recovery.
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