Naira falls to 325 on dollar shortage

The Nigerian Naira has continued its free-fall against the dollar, crashing to N325 per dollar at the close of business on Thursday, Punch reports.

The fall was due to scarcity of the greenback as desperate importers scramble to meet their obligations. Demand keeps piling, adding more pressure on the currency.

The naira remained pegged at N197 to a dollar at the official market.

The CBN's strict foreign exchange policies has been for the depreciation, with many calling for a devaluation of the Naira. The federal government and the hierarchy at CBN remain unmoved in their decision not to devalue the currency.

“The dollar is falling because importers need forex to bring in their goods. They cannot keep on folding their arms because there is scarcity; they must keep buying; the only thing is that the quantity may reduce,” a forex dealer told our correspondent under condition of anonymity.

“We see the naira falling further in coming days if the central bank fails to lift the dollar restriction,” the Acting President, Association of Bureau De Change Operators, Aminu Gwadabe, said.

Tumbling global oil prices have battered Nigeria’s oil-dependent economy, with external reserves down to an 11-year low at $27.89bn on February 9, Reuters reported.

President Muhammadu Buhari is concerned that further depreciation will hurt poor Nigerians, but the CBN’s refusal to revise the pegged exchange rate has widened a chasm between official rate and the parallel market.

Last month, the central bank halted dollar sales to the BDC operators and allowed commercial banks to accept dollar deposits, in a failed effort to shore up dwindling foreign reserves.

Around 90 per cent of the nation’s foreign exchange earnings come from crude oil exports, but mismanagement of the refineries means the country must also import expensive refined fuel.

The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said it was high time the CBN came up with a forex policy that would address the forex crisis confronting the nation.

In an economic note released on Thursday, Rewane said, “Nigerians are perplexed at the endless slide of their currency, which is now trading at N325/$, the lowest point ever.

“This is happening even when the oil price is up at $31pb. The debate as whether to devalue the naira is not the real issue. The discourse should be whether we need an exchange rate policy or not. The absence of a policy is a recipe for economic anarchy and a race to the bottom.”
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