Uncertainty reigns as naira reaches 500 per dollar exchange at yuletide

Contrary to the CBN expectation that anticipated influx of dollar from Nigerians in Diaspora would sustain the exchange rate of the naira, the local currency on Saturday depreciated at the parallel market, reaching for N500 per dollar and even more in some places.

Officials had speculated that about $1.5 billion would be repatriated by Nigerians returning home for the Christmas holidays, upon which all hopes of naira regaining; at least 25 per cent of what it was exchanging in November was hinged.

To that effect, the Minister of Finance, Kemi Adeosun, was quoted recently as having mandating all financial institutions, particularly the CBN, to find an immediate approach of eliminating the gap between the official rates of naira, which hovers around N316 to N320 per dollar to that of the parallel market.

It would be recalled that some operators of the parallel market were rounded up by the security operatives for alleged round tripping.

Read also:  CBN reduces banks’ cash request by 45%, causes squeeze

But it was learnt that the latest free-fall of the naira was caused by reduction of volume of dollar supply to the interbank market by CBN beginning on Monday.

Importers , who besieged most outlets where the Bureau de Change businesses exist, said banks failed to meet their forex demand, and that the banks blamed this on failure of CBN to supply the interbank market enough.

At Lagos Island, for instance, the local currency was traded for N498 per dollar Thursday, but between Friday and Saturday traded for N500.

The same sharp drop in value was recorded against the naira in many parts of the country, with reports saying that importers in Port Harcourt ran helter skelter to get the green back at any cost to clear their goods before the season’s holiday could catch up with them.

However, CBN has insisted that there was a deliberate attempt by some undisclosed interest groups to distort the system.

“Allegation of shortage of dollars in the market is unfounded, on the contrary, we increased the volume of dollar supply through the interbank market, and that is being monitored”, said a director in the Currency Evaluation Unit.

He added that until sanity is introduced in the system through the BDCs, normalcy will not return in the market.

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