Nigeria’s currency woes took a turn for the worse after the exchange rate between the dollar and the naira crossed the N300 mark to close at N301 in a cross section of the parallel market on Wednesday. The rate on the average was about N298 if you wanted to buy. The exchange rate depreciated massively on Tuesday after the CBN announced that it was no longer going to sell forex to the BDC’s blaming them for round tripping and causing more harm that good.
A few black market operators spoken to by Nairametrics reveal the exchange rate will more likely appreciate than depreciate in the coming days suggesting that the market is currently in a panic mode. As investors flee the capital market and risky Nigerian assets, they are probably now buying dollars as a safer bet for their hard earned money. This is turn is putting pressure on the black market which has experienced volatility never to be seen in years.
Analysts spoken to by Nairametrics opine that while this is probably the best time to cherry pick assets, risk averse investors may want to avoid the markets and buy safer assets such as dollars or even Gold. 2016 has been predicted to be a very tough year for Nigeria and could see the economy slide into a recession.
Let’s not deceive ourselves. The recession has started.