According to reports from Bureau de Change (BDC) operators in Lagos State, the Nigerian naira resumed its wild plunge on Friday, falling to an all-time low of N718 versus the US dollar.
However, as parallel market values continue to plummet, the official value remains at N430 per dollar.
The continuing devaluation of the naira comes a year after the Central Bank of Nigeria (CBN) prohibited the selling of currency to bureau de change operators.
BDC operators attributed the market’s recent uncontrolled ascent on a lack of FX and an increase in demand. Meanwhile, some bank customers have complained about not being able to access cash in their domiciliary accounts owing to a lack of funds.
Similarly, in the cryptocurrency P2P Exchange market, the rate has decreased to N705/$1, a 0.6 percent loss from the previous trading session’s pricing of N701/$1.
The naira has been under tremendous pressure in recent weeks, plunging from an average of N618 to a dollar two weeks ago.
On the other hand, the official market exchange rate rose significantly on Thursday, July 28th, 2022, with the Naira closing at N426.2/$1, up from N430/$1 in the previous trading session.
In addition, currency turnover in the Investors and Exporters (I&E) window climbed by 1.93 percent to $129.13 million.
The CBN increased the benchmark interest rate to 14% in July 2022, following a similar 150 basis point rise in May to combat increasing inflationary pressures. However, despite the move by the apex bank, the exchange rate is yet to moderate, with more pressure now on the country’s external reserves. Meanwhile, the Central Bank stated that the external reserve increased by $620 million in June 2022 as a result of inflows from non-oil sources.
According to the communique of the Monetary Policy Committee of the CBN, “the MPC noted that foreign exchange inflow through the RT200 FX Programme in Q1 and Q2, 2022, had increased substantially to approximately US$600 million as of June 2022.
“Members also noted the increase in Diaspora remittances as a result of the Naira for Dollar incentive and urged the Bank not to relent in its efforts to encourage foreign exchange inflow to the economy.”
Meanwhile, Nigeria’s foreign reserve continued on its downturn with a 0.07% decline to stand at $39.25 billion on Wednesday, 27th July 2022 compared to $39.27 recorded the previous day. Notably, the external reserve has dipped by $196.71 million in one week, following the recent volatility in the exchange rate markets.
The apex bank had banned the sale of forex to BDC operators, citing the illegal sale of forex above the market they were licensed to serve. Before the ban, BDC operators had long been a major black market, providing exchange rate support to a large number of those unable to formally access foreign currencies directly from the CBN.
When CBN Governor Godwin Emefiele banned the sale of forex to BDC, the exchange rate was around N501 to a dollar, however, a year after the ban, the value of the naira plummeted to N670 to a dollar.
In an attempt to further restrict the flow of forex at the parallel market, the apex bank last week threatened to arrest and prosecute Nigerians using naira to buy dollars.
It is illegal to take money from banks to buy dollars; it is not a good idea to do so. If the security agencies hold you, you will know the implication of that, “Mr. Emefiele said at a Monetary Policy Committee (MPC) meeting in Lagos.