The Naira dropped to yet another record low of N446 on Monday according to prices obtained from our team of black market operators. This is now the weakest the Naira dropped ever.
According to Reuters, traders opined that the reason for the drop was due to “speculators and strong demand from parents buying dollars to pay school fees abroad”.
Ironically, the president of the Bureaux De Change association, Aminu Gwadabe believes the current price is not a true reflection of the Naira.
“The market is being driven by speculators who are taking advantage of the poor implementation of central bank policy requiring banks to sell dollars to bureau de change operators to ease pressure in the market,” Gwadabe told Reuters, adding that most commercial lenders are reluctant to comply with the directive.
The CBN had in July instructed commercial banks to sell earned from foreign remittances dollars to BDC’s in the hope that it would help reduce the scarcity at the retail end of the market. However, that hasn’t worked as most BDC’s continue to complain of their inability to access forex from commercial banks.
Former Central Bank Governor and Emir of Kano, Sanusi Lamido Sanusi had also opined that the naira is currently undervalued suggesting that the current price is perhaps a bubble.
The naira has been on a downward spiral since the CBN announced a ban of 9 banks from the foreign exchange market, a decision it later reversed. The Naira crossed N400 soon afterwards and has continued to depreciate since then.
The Central Bank has also indicated in its monetary policy communique last week, that external reserves were now less than $25 billion highlighting the need for the Government to introduce fiscal policies aimed at ensuring that foreign investments flow into Nigeria.
The naira exchange rate on the official interbank market was flat at 305 to the dollar.