Naira has fallen further against the U.S. dollar at the official market on Wednesday.
The naira has depreciated to N710 per dollar at the parallel market that has become the most common market to exchange dollar in Africa’s largest economy.
The parallel market dealers are currently unsure of the outcome of prices and as such are predicting further hike.
Bureau de Change operators at Zone 4 in Abuja are buying at N690/dollar as of Wednesday, July 27, 2022, up from the N670 sold on Tuesday. The operators sell dollar at N710.
“Price of dollar has become very high and we are unsure of what will happen in the next minute,” Mr Auwal, a dealer at Zone stated on wednesday.
“Currently, we sell at N710 per dollar and we buy at N690. But the price may go higher anytime soon,” he added.
Nigeria has since 2020 suffered its worse foreign exchange crunch and the Central Bank has devised several unsuccessful forex strategies to improve dollar supply.
At the official window, Naira lost 39 kobo to N416.14 from N415.75 traded on Tuesday.
“The parallel market exchange rate has become the major reference rate in taking economic decision in the economy, amid acute liquidity crisis in the official forex window,” said Muda Yusuf, the Founder and Chief Executive Officer of the Centre for the Promotion of Private Enterprises in CPPE’s Half Year Economic Review
Nigeria reserves used by the CBN to intervene in the official market has similarly lost $1.21bn or 2.99 per cent of value between January 4, 2022 when it posted $40.5bn to $39.3bn as of July 25, 2022.
Yusuf noted, “Many businesses have suffered serious dislocations as a consequence of foreign exchange liquidity challenges, volatility and the depreciation of the currency.
“The sharp depreciation of the exchange rate and the parallel market which is over 300 per cent has worsened the profitability of investments. The capacity to retain employment and the capacity to create new jobs have been greatly endangered because of the foreign exchange crisis.”
He argued that the development may result in high cost of production because of the high import dependence of our manufacturing sector for imported raw materials.
The CEO also said manufacturers will be faced with higher operating costs across businesses in practically all sectors of the economy.