By John Ikani
The naira’s decline against the United States dollar persisted yesterday, reaching an all-time low in the parallel market. It sold at N1100/$1, weaker than the N1,060/$1 the previous day.
On the official Investors and Exporters’ (I&E) window, the naira fell to N883.56/$ yesterday, according to the Central Bank of Nigeria’s data, compared to N775.44/$ the previous day. This depreciation was attributed to persistent dollar shortages, fueled by new demands due to increased import bills for 43 recently unbanned items by the Central Bank of Nigeria (CBN).
Data from the FMDQ revealed that the total daily volume turnover on the official I&E window was $69.88 million, a 48.04 percent decline compared to the $134.28 million recorded the previous day. The gap between the parallel market and the I&E FX Window widened to N216.44 to a dollar.
The highest spot rate observed during the day was N986/$1, while the lowest spot rate was N701/$1.
Analysts have raised concerns that this situation may lead to excessive naira in the hands of government officials, potentially encouraging reckless spending by some state governors.
“We may see some state governors who, in the coming days, due to the excess naira they would receive from federation allocation, engage in reckless spending,” said an analyst who pleaded anonymity.
CBN Governor, Mr. Olayemi Cardoso, recently stressed that the central bank does not have a quick solution for the economic challenges faced by Nigeria.
“It must be emphasised that CBN does not have a magic wand that can be waved at the current economic challenges, said Cardoso.
“The problems facing the bank are large and complex. However, with focused leadership and sustained reforms, it is expected that over time, the country will gain open economic spaces, attract new investments, create employment, and give our hardworking and talented compatriots an opportunity for a more prosperous future,” had explained.
He went on to note that the apex bank under his leadership aims to support fiscal authorities in achieving a $1 trillion GDP within eight years, controlling inflation, increasing foreign reserves, and enhancing the capacity to recover swiftly from economic downturns.
The CBN had earlier declared that importers of 43 previously restricted items were now allowed to purchase FX in the Nigerian foreign exchange market. This move aimed to stabilize the naira exchange rate and enhance liquidity.
Initially, in June 2015, the CBN restricted 43 items from accessing foreign exchange, aiming to conserve forex, promote domestic production, and achieve self-sufficiency. Some of the restricted items included rice, cement, margarine, and more.
In a recent statement, the CBN expressed its commitment to promote professionalism in the FX market to ensure that exchange rates are determined by market forces based on a Willing Buyer – Willing Seller principle.
