Panic Grips Market As Naira Further Depreciates Rapidly
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The naira tumbled to N470 against the United States dollar on Wednesday, down from N455 on Tuesday as fresh dollar shortage hit the official and parallel foreign exchange markets.
The local currency has been relatively stable, hovering around 455 against the greenback in the last one week.
This came after Travelex and First Bank of Nigeria Limited commenced sale of foreign exchange to Bureau De Change operators following the Central Bank of Nigeria’s approval.
Forex traders, however, said on Wednesdays that the scheme had failed to ease the biting dollar shortage in the country.
“What we get from Travelex is not sufficient,” one trader told Reuters, referring to the demand in the market.
At the official market, the naira closed at N305.50 per dollar, a level it had maintained for more than two months, supported by the CBN interventions.
Earlier, the CBN asked international money transfer operators to sell dollars directly to the BDC operators to boost liquidity and narrow the gulf between the parallel market and the official market rates.
Travelex sells around $15,000 to 1,000 retail currency outlets weekly, but the amount is a fraction of what is required to cover the demand from individuals and small businesses.
Dollar shortages have caused many firms to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global oil price, which accounts for 70 per cent of Nigeria’s budget revenue.
The CBN has struggled to support the naira as the nation’s external reserves continue to fall. Traders said the naira had been testing new lows as they tried to find thresholds where liquidity could begin to return
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