The Naira yesterday suffered its biggest daily depreciation against the dollar as the exchange rate rose to N345 per dollar in the parallel market, Vanguard reports.
This represents N20 depreciation when compared with the closing exchange rate of N325 per dollar in the market on Friday. But the naira was relatively stable at the official interbank foreign exchange market as the interbank rate stood at N197.47 per dollar at the close of business yesterday. The naira also depreciated by N45 against the British Pounds Sterling as the parallel market exchange rate rose to N485 per pounds yesterday from N340 on Friday.
Bureaux De Change sources who confirmed this development attributed the sharp depreciation to increasing scarcity of the dollar and Pound sterling in the market. According to an Abuja based BDC operator who spoke on condition of anonymity, “The market is experiencing huge demand for dollars but there is no supply. Even those who have dollars are not willing to sell. The way things are going, the rate might touch N350 per dollar before it stabilises”.
This development widened the gap between the interbank rate and the parallel market rate to N147.53 per dollar from N127.53 per dollar last week. The naira has been on steady decline since Tuesday January 12th 2016, when the Central Bank of Nigeria (CBN) stopped weekly dollar sale to BDCs.
Prior to this action, the naira traded at N265 per dollar in the parallel market. Consequently the naira has depreciated by N80 in the parallel market since the CBN took the action.
The steady depreciation was also aggravated by inability of the CBN to meet foreign exchange demand. Investigations reveal that the parallel market is been bedevilled with demand for foreign exchange from importers of the 41 items excluded from the official market by CBN last year as well as importers of items not excluded from the official market.
This was corroborated by an official of Lagos Chamber of Commerce and Industry, Dr. Vincent Nwanem. Speaking at TheCable Colloquium last week, he said, “For now the high exchange rate is not an issue for manufacturers. No, the major issue now is access. Even the goods that are not listed in the 41 items, our members cannot even fund dollars to fund them.”