The naira remains under pressure in the forex market as foreign exchange reserves lose $ 63.11 million

The Naira traded negatively this week as it depreciated in both the parallel market and the 0.97% I&E window and
0.21%, respectively to close Friday at 520 / USD and 411.67 / USD.

The currency was listed at 505 naira on the unofficial market ahead of Tuesday’s announcement. The central bank said the offices had become channels for corruption and illicit money flows.

Central bank governor Godwin Emefiele said the bank would channel more foreign currency to commercial banks for consumers with legitimate needs, and that it would no longer process or issue new licenses for office operators. exchange rate.

The latest move is part of a series of central bank restrictions to support the naira, the depreciation of which is contributing to soaring inflation, analysts said.

Economists and traders said the currency had to fall further, however, with Yvonne Mhango, economist for sub-Saharan Africa at Rencap, predicting it would head towards 550 per dollar on the black market.

“We expect that the resulting parallel market premium widening will put additional pressure on the naira devaluation during the I&E FX window,” she said.

“From now on, it will be a free fall,” said a currency trader. “More regulation. No one will tell us how much to buy or how much to sell.

A foreign exchange office official who declined to be named said office leaders will meet on Thursday to discuss the central bank’s action and the currency sag.

Foreign reserve
Nigeria’s Foreign Reserve reversed the previous week’s gain to a loss of $ 63.11 million from the closing position of
$ 33.58 billion (Friday, August 13, 2021) to $ 33.52 billion on Thursday, July 19, 2021.

In 2016, the central bank banned the sale of dollars to exchange bureaus to avoid depleting Nigeria’s reserves after a sharp drop in oil prices. The move triggered a 60% drop in the currency in the parallel market and a sharp devaluation in the spot market.

The bank devalued the naira on the official market in May for the third time since the coronavirus pandemic took hold early last year, and has limited access to dollars for imports. But a large gap between the official exchange rate of the naira and the parallel market persisted.

The naira strengthened to 405.00 per dollar on late trading in the official spot market.

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