The naira tumbled to a record low of 345 against the dollar at the parallel market on Monday, extending its depreciation from nine to 11 per cent in less than two weeks.
The naira had hit a record low of 338 against the greenback on Friday, a day after the Bankers’ Committee announced plans to stop providing foreign exchange for school fees and medical bills payment.
The naira, which has been on a free fall in the past few weeks, fell steadily from 310 last week Monday to 335 on Thursday at the parallel market.
The CBN has left the official exchange rate unchanged at N197 to the dollar on its official interbank window.
Foreign exchange linked the continued depreciation of the naira against the greenback and other major currencies at the parallel market to rising demand for forex by importers who have debt obligations overseas.
But experts and some forex dealers said the rising demand for the greenback in the past few days was speculative, adding that most people wanted to hold the dollar for fear that the naira might depreciate further.
The acting President, Association of Bureau De Change Operators, Aminu Gwadabe, said “We have legitimate demand from importers. However, people are also hoarding forex because they feel it may go beyond 400. Except there is a deliberate act to curb the activities of speculators, things may get worse.
“The current naira-dollar exchange rate is artificial; it is as a result of the negative perception about the naira, and the fear the naira may be devalued.”
Tumbling global oil prices have battered Nigeria’s oil-dependent economy, with the external reserves down to an 11-year low at $27.89bn on February 9, according to Reuters.
President Muhammadu Buhari is concerned that further depreciation of the currency will hurt poor Nigerians, but the CBN’s refusal to revise the pegged exchange rate has widened a chasm between the official rate and the parallel market rate.
Last month, the central bank halted dollar sales to the BDC operators and allowed commercial banks to accept dollar deposits in an effort to shore up dwindling foreign reserves.
Around 90 per cent of the nation’s foreign exchange earnings come from crude oil exports, but mismanagement of the refineries means the country must also import expensive refined fuel.
The Chief Executive Officer, Economic Associates, Dr. Ayo Teriba, said there were several ways the Federal Government could attract forex into the country to stabilise the naira, stressing that the currency needed not be allowed to depreciate to the current level.
Teriba had in January said rather than the government borrowing to fund critical infrastructure and hold on to its monopoly in sectors like rail, huge amount of forex could be attracted into the country if the sectors were opened up to local and foreign private investors.
The economist told our correspondent on Monday that there were deliberate actions the government could take to attract forex in the long and short terms.
The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said it was high time the CBN came up with a policy that would address the forex crisis confronting the nation.
In an economic note released on Thursday, Rewane said, “Nigerians are perplexed at the endless slide of their currency, which is now trading at N325/$, the lowest point ever.
“This is happening even when the oil price is up at $31 per barrel. The debate on whether to devalue the naira is not the real issue. The discourse should be whether we need an exchange rate policy or not. The absence of a policy is a recipe for economic anarchy and a race to the bottom.”