Naira made a record decline this week as it went to its lowest in the last 42 years. Prediction is that the currency is on a free fall except the government made an effort to allow naira find its market value itself.
The naira weakened to a record in unregulated trading on Friday as money
changers said the Central Bank of Nigeria reduced the amount of dollars it
made available to them.
The black-market rate, used by exchange bureaus in Africa’s largest
economy, depreciated 5.8 percent to 260 per dollar compared with its level
on Monday, according to Aminu Gwadabe, president of the Lagos-based
Association of Bureau de Change Operators of Nigeria. That’s 24 percent
weaker than the official rate of 198.52 per dollar as of 12:56 p.m. in
Only about 1,200 of 3,000 currency-exchange operators received the amount
of dollars they requested from the central bank last week, Gwadabe said by
phone from Lagos. “From what we see, the central bank is still unable to
meet majority demand,” he said.
Two calls to the mobile phone of the bank’s spokesman, Ibrahim Mu’azu,
didn’t connect when Bloomberg sought comment.
Policy makers are under pressure to devalue the naira after this year’s 32
percent plunge in oil, which accounts for about 70 percent of government
revenue, contributed to the 14 percent slide in Nigeria’s reserves in 2015
to $29.6 billion. The nation’s official exchange rate has been kept at
198-199 per dollar since March after the central bank restricted the
ability of lenders to buy foreign currency.
In June, the monetary authority stopped importers of about 40 items,
including wheelbarrows and glass, from obtaining dollars.
The Abuja-based central bank will further tighten rules on retail dollar
sales, according to a circular dated Nov. 30 and posted on its website
Friday. It ordered that from Jan. 1, persons selling the U.S. currency in
amounts of more than $10,000 to a foeign-exchange bureau must disclose the
source, while bureaus are banned from transacting business outside their
“Definitely, the naira is in trouble with these tight rules,” Gwadabe
said. “It will worsen the scarcity” of dollars, he said
Money changers met with the central bank on Dec. 8 to “discuss the
difficulties in ensuring availability of dollars,” Gwadabe said. While
policy makers “agreed to make more dollars available” to reduce tension,
they have yet to do so, he said.