Analysts and traders linked the drop to the mounting fears among traders and investors over the flexible exchange rate policy proposed by the Central Bank of Nigeria.
They said the continued delay by the CBN in releasing the blueprint for the planned flexible exchange rate policy was fuelling hoarding and speculation in the forex market.
The CBN’s Monetary Policy Committee had two weeks ago announced plan to adopt a flexible exchange rate. The Governor, CBN, Mr. Godwin Emefiele, said the blueprint for the proposed policy would be released soon.
The delay has, however, caused the stock market to record huge losses after recording landmark gains following the announcement of the plan to adopt the policy.
“The market’s perception of the lack of clarity over the regulator’s plan on the exchange rate policy is fuelling hoarding and all manner of activities; this is why the naira dropped against the dollar at the parallel market today,” the National President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, said.
Analysts had last week said the local currency would trade around 350 per dollar this week as uncertainty over the implementation of the CBN’s planned new flexible exchange rate policy persisted.
The local currency retreated to 350 to the dollar on the parallel market on Thursday from 360 the previous week.
The naira had weakened shortly after the CBN’s Monetary Policy Committee announced plans for new exchange rate policy two weeks ago, but strengthened when the details of the new policy were delayed, Reuters reported.