Naira Exchanges At N400/$, As Analysts Say Devaluation Cannot Cure It All

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BEVERLY HILLS, February 18, (THEWILL) – The naira further depreciated in value to a record low of N400/$ following continued scarcity of the greenback as well as speculation occasioned by the forex policy of the Federal Government, THEWILL findings reveal.

The naira on Thursday weakened by N40 or 11.11 percent against the dollar as it closed at N400/$ during the day compared with the N360/$ it closed the previous day at the parallel market. Further investigation indicated that the naira later closed at N389/$ following some resistance from customers.

At the autonomous market, the local currency lost N28.50k or 7.96 percent against the greenback, closing at N386.50k/$ on Thursday from N358/$ the previous day.

It depreciated slightly against the dollar by N0.01k or 0.005 percent at the interbank foreign exchange (FX) as it closed at N199.35/$ on Thursday, as against N199.34/$ the previous day, data from FMDQ revealed.

However, the CBN's clearing rate at the interbank market on Wednesday remained unchanged at N197/$, data from FMDQ indicated.

“Naira is dropping to 390 and 385 because there was little resistance from customers. I don't anticipate further record depreciation as the weekend approaches,” Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said.

The BDCs are yet to get supply from international oil companies, rather they are getting dollar from individuals, Gwadabe said, adding that they are getting not less than $10,000 from individuals.

Currency dealers noted that the CBN only allocated between $150-$200 million weekly to importers, but this is considered a drop in the ocean compared with requests pilling up by commercial lenders seeking dollars for their customers.

Analysts say the immediate measure to the current situation is for the apex bank to relax some of its forex rules, otherwise the local currency would continue on a free fall.

Johnson Chukwu, CEO of Cowry Asset Management Limited, said the FX policy of the government tended to be nationalistic rather than economic.

Chukwu was concerned that the country had built up demand for forex, which had been shifted to parallel market, adding that parallel market had become the ruling market for importation of goods.

He said the country's potentials were still intact while the policies had kept investors away, adding that the country was doing demand management while supply management suffered.

Story by David Oputah