Naira extended its decline on Tuesday as it hits N550 against the United States Dollar at the parallel market, popularly called the black market, representing an all-time record low against the greenback.
Against the British Pound and the Euro common currency, the Naira slid to N750 and N637, respectively.
The inability to service the economy with enough forex coupled with the decision of the Central Bank of Nigeria to halt the sale of forex to Bureau De Change Operators have compounded Nigeria’s forex situation and further disrupted the Naira’s outlook.
Despite insisting that exchange rates are stipulated Central Bank of Nigeria’s rates, many Nigerians and businesses operating in the country find it hard or impossible to access forex at the central bank’s rates.
The Central Bank of Nigeria sells U.S Dollar at N410.51, while the British Pound and Euro are sold at N568.1869 and N483.6629, respectively.
Currency speculators are taking advantage of the huge exchange rate difference between the official market and the black market.
The slump at the black market comes on the heels of increased forex demand pressure and a sharp decline in dollar supply.
Individuals and businesses have to rely on the black market for their foreign exchange requirements because the banks appear to be rationing dollars. The apex bank’s plan to curtail the illegal market by banning sales to money traders and reprimanding people who profit from the arbitrage seems not to be working and dealers are speculating the currency will weaken further.
Reports also have it that banks are finding it difficult to meet demands from Nigerians, creating a window of opportunities for traders at the black market to profit.
The local currency continues its unprecedented fall at the black market following CBN’s actions to channel forex demand away from the window and buyers scramble to buy the scarce dollars.
The Central Bank of Nigeria had earlier stated that it is closely monitoring the forex transactions of banks operating in the country and warned them against all forms of malpractices threatening that those found culpable would have their foreign exchange operating licenses suspended for at least a year.