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As Dollar demand increases, the Naira falls to N700/$1.

As Dollar demand increases, the Naira falls to N700/$1.

The naira has dropped to a new low of N700/$1 in the parallel market as retail end-user dollar demand remains strong.

The naira closed last week at N630/$1 and had been trading in the N620/$1 range for several weeks prior to the current low.

The findings revealed that, despite the fact that many black market dealers are asking between N700 and N710/$1, actual transactions have remained within the N700/$1 range.
Speaking about the development, Abudul Hassan, a Lagos-based Bureaux De Change (BDC) operator, stated that the parallel market is where the CBN finds it difficult to meet demand at the official markets.

“Everybody is moving to the parallel market and we have seen rising pressure there. With little control from the regulator, people are quoting sale price at N710/$1 but actual transactions are settled around N700/$1. We expect the naira to continue its fall in the next few weeks as dollar liquidity in the system continues to nosedive,” he said.

Johnson Chukwu, Managing Director of Cowry Asset Management Limited, stated that in order to save the naira, Nigeria must develop an economy that is a net exporter of valuable goods and services in order to earn more dollars.

He stated that manufacturing and exports should be prioritized in order to accelerate the recovery of the local currency.
He stated that Nigeria should raise taxes and generate more revenue because the country’s current situation is unprecedented in the last three decades.

Robertson, who is also RenCap’s Head Macro-strategy Unit, added: “Things are not looking pretty good for Nigeria and other emerging markets. Oil production in Nigeria has fallen so badly in the last few years and oil prices is also about falling more. We are going to see disinflationary policies coming because we are approaching recession,” he said.

Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the naira is falling on the back of heightened forex demand compared to limited forex supply.

He said: “Nigerian consumers, businesses and individuals alike are facing challenges and headwinds and are reeling in an atmosphere of hopelessness. This is because of a myriad of factors.”

“Notably, the precipitous fall of the naira in the forex market, the power supply shortage (national grid – 3,500MW) and now the almost unaffordable price of diesel (N850/liter). In spite of the hike in interest rates, we are witnessing what some analysts fear may become a bout of runaway inflation. Inflation is not just domestic but global.”

The CBN announced a rebate scheme to raise $200 billion in earnings from non-oil proceeds over the next three to five years by incentivizing exporters to repatriate and then sell dollars into the local market as part of its longer-term forex strategy to save the naira.

This and other moves were made to strengthen the local currency against the US dollar and other global currencies.

Gistlux Nelson

David is an Entertainment, Sport blogger and a Graphics designer. He is on a mission to help everyday entertainment news, Gossips, Sports and Legit online making tips.

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