The CBN restrictions on exchange sale if fueling the unofficial trade in dollars and the ban on importers from accessing the foreign exchange market is also helping the volatility of the Naira-Dollar exchange. Naira has fallen by 10.5% ( 218 to 241 ) against
the Dollar since the 23rd of June when the forex rule came into full effect.
Economic analysts had said the CBN needed to devalue the Naira to allow the local currency achieve an equilibrium price against the dollar. The central bank had however said it would not be focusing on the thinly-traded parallel market when determining the exchange rate, adding that people preferred to use the unofficial market for undocumented transactions.
Foreign investors had been on the sideline, waiting for the CBN to devalue the Naira before investing in Naira-denominated assets. Local and foreign analysts had predicted that the Naira might hit 250 against the dollar at the parallel market any time soon if the artificial scarcity trend continued.
Meanwhile, stocks fell to a more than three-month low yesterday. The local bourse, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, dropped for the 9th consecutive day as investors shed banking, consumer and oil shares.
The new forex rule had led to huge demand at the parallel market, causing dealers to hoard the dollar in anticipation of further fall in the Naira. CBN appears to be in a fix as the spread between the official and parallel market continues to widen by the day….. bt in all things, let’s learn to shout n scream “Sai Buhari.”…… Credit: PUNCH