The exchange rate between the naira and the dollar closed Wednesday at N370 to $1 hitting another new low. The exchange rate has depreciated to a new low every day since last Friday as dollar scarcity continues to bite hard.
Black market operators spoken to by Nairametrics opine that the exchange rate could depreciate to about N400 to the dollar citing the scarcity of the green back as reason.
The exchange rate has been on a downward spiral since the CBN shut out black marker operators from its window starving the parallel market of a major source of forex. Traders also attribute the scarcity to rumours that the CBN could ban sale of forex for school fees and medical tourism.
The disparity between the naira and dollar has created huge arbitrage opportunities with for round tripping. Investigations by Nairametrics also suggest that buyers of personal or business travel allowances at the official rates have also ended up selling all or part of the forex at the black market cashing in on over 40% of their returns.
Analysts also believe the free-falling exchange rate further buttresses CBN’s view that forex sold to BDC operators mostly found its way to the parallel market. The gap it created has clearly showed how important the official window was to the parallel market supply chain. It is also widely believed that the true value of the Naira could be in the region of N250-N280 suggesting that the current price could be artificial.
The CBN external reserves now stands at about $27.8 billion dollars down by about $1 billion dollars since the beginning of the year.