Naira plunges further to N930/$1 as scarcity worsens

The naira depreciated to another record low of N930 against the dollar at the parallel market on Thursday as the demand for dollar by importers and other end-users far outstrips supply.

This is further compounded by apparent non-intervention by the Central Bank of Nigeria (CBN) and the lack of a price control mechanism.

The naira has now weakened by 18.7per cent since the beginning of August at the parallel market. The exchange rate weakened by 11.5per cent in the whole of July 2023.

Quotes for the British Pounds and Euro also rose to as high as N1,175 and N975 to the dollar respectively as of Thursday.

A currency trader has highlighted dollar scarcity as a major cause of the very high exchange rate with even the commercial banks complaining that they don’t have foreign exchange. This has made most of the importers and other end-users source for their foreign exchange requirements at the parallel market.

He said: ‘’The problem is that there is scarcity of foreign exchange and the demand is very high. Commercial banks are not really getting allocation from the CBN and do not have foreign exchange and so most importers and other end users go to the black market to source their foreign exchange.

“The high exchange rate is due to low supply as most people with the dollars are not selling and most of the supplies are from diaspora remittances from individuals who sell their forex at whatever rate they like.’’

The disparity between the official and parallel market rates still remains wide after the I&E window closed at N782.38/$1 on Wednesday, August 9th.

Although the exchange rate depreciated by 3.18 per cent at the I&E window when compared to the N757.51/$1 that it traded on Tuesday, the disparity still remains high at N147.62, which is still one of the widest since the unification of the naira on June 14th, 2023.

In contrast, the exchange rate unification was expected to bridge the gap between the official and black market rates.

Analyst point to pent-up demand as the major reason why most forex buyers continue to patronize the black market.