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Naira nears 600 per dollar as Emefiele pursues politics

Nigeria’s currency, naira, neared N600 per dollar at the parallel market on Tuesday as controversy continues to trail the move by Godwin Emefiele, governor of the Central bank of Nigeria, to run for president.

The local currency weakened to 592/$ at the parallel market from 590/$ following dollar shortages at the official market,

At the Investors and Exporters (I&E) forex window, naira depreciated by 0.48 percent as the dollar was quoted at N419.00 as against the last close of N417.00.

Most foreign exchange dealers who participated in the auction maintained bids between N410.84 and N423.00 per dollar.

“The naira/dollar exchange rate will get to N600 because the CBN has reduced its supply to banks while demand has not reduced,” a Lagos-based investment analyst told BusinessDay under anonymity.

In the FX spot and derivatives markets, the total foreign exchange turnover for the week-ended May 6, 2022, was $409.36 million, representing a decrease of 56.58 percent ($533.34 million) from $942.70 million reported for the week-ended April 29, 2022, a report by FMDQ indicated.

The week-on-week (WoW) decrease in total turnover was driven by the 63.17 percent ($519.79 million) and 11.31 percent ($13.55 million) decreases in FX Spot and FX Derivatives turnovers respectively.

The WoW decrease in FX Derivatives turnover was driven by the 8.06 percent ($4.93 million) and 14.71 percent ($8.62 million) decreases in FX Forwards and FX Futures turnovers respectively.

In the FX Spot market, the total value of transactions for the week-ended May 6, 2022, was $303.09 million, representing a decrease of 63.17 percent ($519.79 million) from the value of transactions executed in the week-ended April 29, 2022 ($822.88 million).

Muda Yusuf, chief executive officer of Centre for the Promotion of Private Enterprise, said foreign exchange policy framework is a major challenge in Nigeria.

According to him, the sharp and increasing currency depreciation in the parallel market remains a cause for concern.

“It is a trend that should not be allowed to continue and all necessary steps need to be taken [and urgently too] to stem the slide and volatility. These developments should not be ignored,” he said.

He said it is as much of a concern to investors, consumers as it is to producers and other stakeholders that create value in the economy.

Read also: How CBN’s eNaira sets global example for Central Bank digital currencies – IMF

The current rigid stance of the CBN on the foreign exchange policy, he said, was hurting investors, creating distortions and retarding the recovery prospects of the Nigerian economy.

“For most businesses, the parallel market is now the default foreign exchange market,” Yusuf said.

The gap between the official and parallel market exchange rates (premium) widened to N171.83 per dollar at the end of first quarter 2022 from N106.33 per dollar on July 28, 2021, a day before the apex bank suspended dollar sales to the Bureau De Change.

The CBN’s economic report for the fourth quarter of 2021 showed that total foreign exchange sales to authorised dealers by the CBN at $5.15 billion, decreased by 3.6 per cent, compared with the level in the preceding quarter.

Read More : Naira nears 600 per dollar as Emefiele pursues politics

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