Naira
Naira

CBN adjusts spot rate to N373/$

By Babajide Komolafe

The declining fortune of the Naira against the dollar in the parallel market is expected to persist this month with the exchange rate rising to N480 per dollar by the end of the month.

Last week the Naira depreciated further by 50 kobo in the parallel market as dollar demand intensified amidst scanty supply.  According to  naijabdcs.com, the live exchange rate  platform of the Association of Bureaux De Change Operators of Nigeria (ABCON), the parallel market exchange rate rose to N473 per dollar last week from N472.5 per dollar the previous week.

Consequently, the Naira has lost 25 percent or N97 of its value against the dollar since March 26 when the Central Bank of Nigeria (CBN) suspended dollar sales to Bureaux de Change (BDC) operators.

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Furthermore, the CBN depreciated the naira at the official spot market, by adjusting the spot exchange rate to N373 per dollar from N361 per dollar, translating to N12 depreciation.

The Naira, however, appreciated by N2.50 at the Investors and Exporters (I&E) window as the indicative exchange rate dropped to N386 per dollar last week from N389.5 the previous week.

Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company Limited, however, projected that the declining fortunes of the local currency in the parallel market  will worsen this month and the Naira will depreciate to N480 per dollar in the parallel market by the end of the month due to continued    failure of the CBN    to meet dollar demand from corporates.

Speaking at the Lagos Business School monthly breakfast presentation, Rewane noted that the CBN has intensified foreign exchange rationing in its bid to preserve the nation’s external reserve, which to    $35.678 billion on Thursday August 6th  from $35.877 billion on Thursday July 30th, translating to $199 million    week-on-week decline.

He stated:    “Shortage of forex increasing demand at other markets, especially at the parallel market. Corporates were receiving approximately 15 percent of their demand for dollars while the balance of 85 percent is being sourced from the parallel market and  non-deliverable forwards market”, he said.

Stressing that exchange rate pressures will mount as lockdown relaxation picks up, Rewane projected that the multiple exchange rate regime will persist till 2021, while the nation’s external reserves will decline further to $34 billion by the end of August.

Vanguard

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