Uncertainty over the Central Bank of Nigeria’s planned exchange rate policy has continued to rattle the foreign exchange market.
The local currency dropped against the United States dollar from 365 to 367 at the parallel market on Monday.
The naira, which has been under persistent pressure, fell to 371 last week before appreciating to 365.
Analysts linked the continued pressure on the naira against the greenback to the CBN’s prolonged delay in releasing the blueprint or details of the planned forex policy.
Economists, analysts and foreign exchange dealers have said the naira will appreciate significantly at the parallel market as soon as the CBN releases details of the planned forex policy.
They said the naira might plummet further against the dollar this week as the shortage of the greenback worsens.
The President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, however, said the black market rate might strengthen if the official one was weakened and inflows from investors picked up.
He said, “The naira may trade around 300 to a dollar on the black market after the announcement, because we expect supply to improve.
“In the past weeks, the central bank had created doubt in the market, which triggered another round of speculation.”
The CBN Monetary Policy Committee had a few weeks ago said it would abandon its naira peg to the dollar and introduce a flexible currency regime.
It has not given how this will work and this has unsettled investors who are worried about getting caught in the middle of a devaluation.
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 central bank banned dollar sales to retail Bureaux De Change in January and reduced supply at its official interbank forex market in an effort to conserve reserves, now at their lowest level.
The World Bank had last Tuesday cut Nigeria’s economic growth forecast for this year, citing weakness from oil output disruptions, low prices and the CBN’s foreign exchange restrictions.
The lender, in its semi-annual Global Economic Prospects report, said Africa’s biggest economy was expected to grow by 0.8 per cent, down from an estimate of 4.6 percent in January.