Naira Slumps To N470/$1 On Parallel Market
Naira dropped further on the parallel market yesterday, hitting N470 against the dollar as scarcity of foreign exchange, occasioned by the outbreak of novel coronavirus continues to negatively impact the local currency.
Naira has been on a steady decline against the dollar in the last few weeks, falling by over 15 per cent from N390 to the greenback late last month to N470/$1 yesterday.
According to analysts at AZA, the crash in oil prices has sent naira crashing to its weakest level on the parallel market since 2017.
In a note obtained by New Telegraph at the weekend, the analysts said: “We foresee further pressure on the naira after last week’s seven per cent slide, as a result of declining export revenue combined with deepening economic fallout from coronavirus. The pursuit of dollars is exacerbated by demand from foreign investors unable to repatriate funds.”
In the wake of the slump in oil prices, CBN on March 20 devalued the official naira exchange rate from N307 to N360 to a dollar and also weakened it on the Investors and Exporters (I&W) window as well as the Bureaux De Change (BDC) segment of the market at N366 to N380 to a dollar and N360 to N380 per dollar respectively.
Analysts note that apart from low dollar inflow due to low prices of crude oil (which is the country’s main foreign exchange earner), capital flight as a result of foreign investors’ concern about COVID-19, coupled with the CBN’s suspension of sales of foreign exchange to BDC operators, has worsened forex scarcity in the system.
A forex dealer, who did not want his name in print, told New Telegraph that the suspension of forex sales to BDCs as well as the scramble by foreign investors to repatriate their funds, will continue to put pressure on naira.
The dealer said: “Although there is very little business taking place due to the coronavirus lockdown, the scarcity of forex in the system and the depletion of the external reserves is encouraging forex speculators to prepare for another naira devaluation.”
