Naira hits 400/dollar as banks sell forex to BDCs

The naira plunged to 400 against the dollar at the parallel market on

Thursday as shortage of foreign exchange continued to have negative
effects on economic activities in the country.
The local currency had closed at 390 against the greenback on Wednesday.
The shortage of forex at the interbank and the black market has continued
to weigh on the value of the naira.
After closing at 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 currency closed at 315.06 to the United States dollar at the interbank
market on Thursday.
Economic and financial analysts have linked the wide depreciation in the
value of the naira against the dollar at the parallel market to huge demand
for forex by holidaymakers seeking to travel abroad.
However, some experts said the huge demand for forex at the parallel
market was beyond the normal summer rush.
They linked the development to the activities of speculators and significant
demand by manufacturers and importers whose demand was not being met
at the interbank market.
Currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said, “The issue still
has to do with inadequate forex supply. As far as you continue to have
some 41 items banned from the interbank market, importers and
manufacturers of those items will continue to seek for forex at the parallel
market.
“This is part of the reason you are having pressure at the parallel market.”
According to Ezun, the global plunge in oil prices has affected the capacity
of the Central Bank of Nigeria to defend the naira.
“If the price of oil should go up, more forex will come in and you will see
that things will change,” he added.
A Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye,
Sherrifdeen Tella, said the huge demand for dollars could be due to the
activities of genuine manufacturers and importers seeking forex for
production and business purposes, or corrupt people who had stolen state
funds.
Tella said, “The naira is falling at the parallel market because there is
scarcity at the interbank market. This fall could be due to the activities of
genuine manufacturers or some people you cannot identify. These are
people who have stored naira somewhere and are seeking to convert them
to dollars. They use every chance they have to buy dollars. What the CBN
may need to do is to neutralise that money by changing the colour of the
N500 and N1,000 notes.