The exchange rate between the Naira and Dollar dropped to as low as N402/$1 on Wednesday in some sections of the black market surveyed in Lagos by our team.
This was a N4 difference between the N397 traded at the parallel market on Tuesday.
According to sources, the reason for the spike was due to a shortage of dollars on the streets as traders did not have enough supply to meet demands.
Sources also opine that the recent ban on of 9 commercial banks by the CBN could also have caused panic in the market as traders, afraid of another round of liquidity squeeze may have decided to hoard in anticipation of what further actions the CBN might take.
A report also quoted that some Access Bank executives opined that the naira could cross N500 by 2017.
An article from Reuters, also suggest that the interbank market did not see any trade “until three minutes before the end of the session, when the central bank which has been reducing its dollar sales, intervened….Only three deals worth $0.75 million were traded at 305.50 per dollar, a level the market has closed at since Monday”
The current price has further widened the difference between the interbank rate and the black market rate. According to information on the website of the FMDQ, the Inter-bank Rate closed at N315.93 a whopping N87 difference or 27% price disparity.
The current price disparity is about the widest we have seen since the CBN abandoned the “imaginary” peg of N282/$1 traded for weeks after the currency was left to float.
Critics will point to the banned 40 items, depleting reserves and the drop in oil prices are major factors that will continue to impede any progress expected at the foreign currency market.