With the introduction of new guidelines for the nation’s foreign exchange market with the adoption of a single structure through the interbank/autonomous window by the Central Bank, the naira on Monday crashed by 31 per cent to 288.85 against the United States dollar at the close of trading. It closed at 288/dollar at the new official market.
The local currency also depreciated at the parallel market where it closed at 346 to the greenback, down from around 330 and 335 on Friday.
The naira, which was pegged at 197-199 per dollar before the emergence of the new forex policy, closed at 288.85 to the dollar on Monday, with the forces of demand and supply coming to play to determine the value of the nation’s currency after the CBN allowed it to float freely.
The CBN said it cleared a total foreign exchange demand backlog of $4bn with a dollar exchanging for N280 at the foreign exchange market.
The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, said the naira fell to 346 against the dollar at the parallel market, because “the interbank market has not effectively taken off.”
He said, “There is no way demand can reduce at the parallel market now because the 41 imported items are still banned from accessing official forex market,” he said, adding that the backlog of dollar demand was far higher than $4bn.
“Up until now, many correspondent banks have yet to send their unmet obligations to the Central Bank of Nigeria. And for the foreign inflow that we are expecting, there is still lack of confidence by the investors as to how liquidity is going to be sustainable so that when they want to move out, they won’t have the problem of dollar scarcity. So, they are watching to see how liquid the market will be, and that will take a couple of weeks before this can be unraveled,” Gwadabe explained.