The pressure on the Nigeria naira rose sharply on Wednesday with the local currency falling to a new low of 371 against the United States dollar at the parallel market. It had closed at 361 per dollar on Tuesday.
The CBN delay in explaining how the proposed flexible exchange policy will work has increased speculation on the Nigeria naira.
Foreign exchange dealers and investors said the delay had caused uncertainty in the forex market and fuelled hoarding of hard currencies.
According to forex dealers at black markets in Lagos, Abuja and major airports across Nigeria, the dollar was sold for between 367 and 373 on Wednesday.
Findings from various operators revealed that the Nigeria naira went for 371 against the greenback in most of the parallel market locations.
Abokifx.com, an online portal that monitors the movement of exchange rates at the parallel market, reported that the naira closed at 367 against the dollar.
However, the Nigeria naira traded at 199.40 to the dollar on the official interbank market, within the CBN’s pegged rate band.
“Demand for the greenback has increased amidst growing scarcity as uncertainties created by the new policy have caused individuals to start to stock dollars,” the National President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, told Reuters on Wednesday.
Economic analysts said heightened political risks, evolving economic crisis and the CBN’s delay in unveiling its blueprint on the proposed forex policy were responsible for the fast depreciating rate of the Nigeria naira at the parallel market.
An economic analyst and Chief Executive Officer of Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “Foreign investors are fast losing confidence in the economy, seeing that they cannot bank on what the central bank says. It is almost two weeks now since the announcement of a new policy and yet, the blueprint has not been unveiled.
“Secondly, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, just said that oil production had fallen significantly as a result of the disruption in the Niger Delta; this means a major drop in our forex earnings. So, this is an evolving economic crisis.”
Other analysts said the value of the local currency was dipping because customers were trying to hedge against a possible depreciation when the CBN clarifies its new forex policy.