The naira yesterday exchanged at N1,534.39 to dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) – the official market.
The exchange rate fell to N1,490 to dollar at the parallel market with traders expecting further weakness in the coming days as dollar shortages worsen.
That was the second time in many months that the official exchange rate was weaker than the parallel market rate.
The naira had on January 30, exchanged at N1,482.57 to dollar at the NAFEM – the official market
The exchange rate fell to N1,460 to dollar at the parallel market over persistent dollar scarcity.
The local currency has continued to depreciate at both official and parallel market over persistent dollar scarcity.
Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.
Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.
“The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told Business Day on Tuesday morning.
Former Executive Director, Keystone Bank Limited, Richard Obire advised that Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of long substantial bills for food and energy imports should be reversed to save the naira.
Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.
On ways to strengthen the naira, he advised that in the short-term, there is need to find non-market damaging ways to increase the supply of hard currencies and reducing the demand for same.
He said that insecurity hampering food production needs to be tackled with a sense of urgency and effectiveness.
“Priority should be given through deploying pragmatic incentive programs to drive up the volume of food products for domestic consumption and industrial use to reduce our food import bill. All government consumption expenditures requiring the use of hard currencies should be suspended indefinitely, starting now,” he advised.
-The Nation
