The Naira is currently going through one of its darkest times in the parallel market. Above is the path the naira has taken since Buhari was sworn in as President of Nigeria. As the chart depicts, the naira has gone through several stages of depreciation culminating in its current price of N308. From when we got kicked out by JP Morgan in September to the realization that our external reserves can no longer support our yearnings, its been a journey of change. The situation further deteriorated sometime in November after the CBN introduced a rash of policies that further reduced access to the dollars by the BDCs. It got worse this year after the CBN kicked the BDC’s out of its forex markets and after the President affirmed it has not seen any reason to devalue.
The Change president believes he was voted in to protect the economy from foreign and local scavengers who he feels are only out to take blood from the economy at the expense of the masses. To him, the exchange rate should probably be 1:1, after all he calls the shot.
In response to the President’s wishes, the CBN has refused to devalue the naira for the third time since 2013. The parallel market on the other hand has continued to depreciate the value of the naira following demand by speculators and those who genuinely need it for transactions. Things are unlikely to change even if the CBN decides it wants to devalue today. The pent-up demand cannot be met especially if oil prices continue to dip. For anyone looking for a sign of relief, just keep a close watch at the Brent Crude price.