Nigeria: Naira Slumps Further To N570/$1 At Parallel Market, As Scarcity Bites Harder

By John Ikani

The Naira continued its downward trend after exchanging to the Dollar for 570 on Thursday, amidst increasing demand and activities of speculators.

Analysts say if the current situation persists, the currency may drop to as low as N700/$1 before the end of next month.

In the same vein, one British Pound exchanged for N770, while one Euro went for N655. Specifically, Naira fell significantly against the U.S Dollar at the parallel market on Thursday, falling further from N562 per $1 it exchanged on Wednesday, according to information obtained from AbokiFX.

This implies an N8.00 or 0.90 devaluation from the N557.00 it traded on Tuesday. Meanwhile, the Naira remained stable against the greenback at the official market on Wednesday and Thursday, as foreign exchange turnover remained unchanged from what was posted in the previous session on Tuesday.

Implications of the plummeting fall

An Economist and former Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf decried the current situation, especially as it affects manufacturers, who hitherto have been struggling to operate competitively.

According to him, “The impact of the naira exchange rate depreciation and forex liquidity challenges on manufacturers have been very devastating. Production and operating costs have skyrocketed, profit margins have been eroded, sales have declined sharply and business sustainability is at risk.

“The exchange rate volatility has created profound uncertainty and unpredictability in the investment environment. Investor confidence has been correspondingly negatively affected. The forex situation has become a major driver of inflation.”

Also, the Managing Director of Lancelot Ventures, Mr Adebayo Adeleke added that “Things are getting very hard for manufacturers. Dollar is not readily available to manufacturers. Dollar comes in trickles and insignificant quantities through the banks.

“The current currency value is having a very negative impact and pushing the cost of input through the roofs. This trend will slow down production as prices may not be absorbed by the market. This may slow down production, cause job losses, higher poverty, and increased insecurity, among others.”