Naira falls to N480/$1 in black market amid plans to reopen airports

Naira fell by 1.04% on Tuesday to a new low of N480 against the United States dollar on the black market following government’s declaration of its plans to reopen airports for international travels in a fortnight, an action that may increase dollar demand, traders said.

The local currency had been stable on the parallel market for more than a week at N475 to a dollar, 20% weaker than the rate used at the over-the-counter spot market used by investors and exporters.

With the price of oil, Nigeria’s biggest foreign exchange earner, low and foreign reserves crumbling, the Central Bank of Nigeria (CBN) is clinging to dollars to shore up the naira, creating a shortfall of hard currency supply for investors and importers.

Forex markets expect a demand surge with airports having been shut since 23rd March to all but essential international flights as part of measures to flatten the curve of COVID-19 spread.

Read also: Naira falls to N480/$1 in black market amid plans to reopen airports

The apex bank in March called off forex sales to bureaux de change that resell the currency to individual users with medical bills and school fees payment obligations overseas.

Traders see dollar demand ballooning as foreign travel resumes from 29th August, which could increase pressure on a currency that has been devalued two times this year and stretching the CBN’s capacity to defend the naira.

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