Nigeria’s naira weakened against the United States dollar at both the parallel market and the NAFEX window, on Friday May 22, 2021.
At the parallel market, naira to dollars exchange rate weakened to 485/dollar on Friday as against the 484/dollar on Thursday, Friday 23, 2021.
Also at the NAFEX market, naira closed at 412/$1, indicating 0.17 percent depreciation, according to FMDQ Group.
Meanwhile, to discourage appetite for dollars, the central bank ordered banks to limit dollar-cash deposit allowances to $5,000 from $10,000 a month.
A Forex Trader at AZA Finance, Oghenefejiro Eduviere, predicted that would weaken slightly weakening towards 420 to the dollar on the NAFEX window, saying that the extension of the ‘Naira 4 Dollar’ scheme amounted to a limited technical devaluation.
Last weekend, the Central Bank of Nigeria removed its official exchange rate of N379/$1 from the home page of its website, raising speculation of a further devaluation of the currency.
The CBN had in August last year devalued the naira to 379/$1 from 360/$1.
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Analysts at FBNQuest said the removal of the exchange rate might suggest that the unification of rates reportedly pledged to the International Monetary Fund ahead of the disbursement under the rapid financing instrument in April 2020 had happened.
They noted that the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, was quoted in March as saying that the rate at the I&E window was the rate used by the government for the monthly distributions from the Federation Account Allocation Committee (FAAC).
Meanwhile, the Association of Bureaux De Change Operators of Nigeria (ABCON) said on Friday that foreign exchange speculators would lose over N100 billion in the next one month due to CBN’s continued massive funding for BDC operators.
In a statement issued on Friday, the President, ABCON, Alhaji Aminu Gwadabe, attributed the weakened naira at the parallel market and I&E window to currency speculators hoarding dollars to profit from the currency crisis.
According to him, the CBN has promised to improve funding for over 5,000 BDCs nationwide in order to deepen market liquidity and protect the naira against speculators.
