Naira slips vs dollar on planned reopening of international flights
Nigeria’s naira depreciated against the dollar by 1.04 percent on Tuesday on the parallel market to N480 after the government announced its plans to reopen international airspace for travelers by August 29.
Traders said the planned reopening of international flights is expected to trigger an increase in demand for the dollar by tourists and those who are trapped in the country since the lockdown and wanted to return to their base abroad.
The naira had been stable for over a week on the parallel market at N475 to the dollar, where it trades at more than 20 percent weaker to the official over-the-counter spot market.
With the price of oil, Nigeria’s main export, depressed and foreign exchange reserves dwindling, the Central Bank of Nigeria (CBN) is hanging on to dollars to support the naira – leaving a shortage of hard currency supply for investors and importers.
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Currency markets anticipate an increase in demand with airports having been closed since March 23 to all but essential international flights as part of efforts to combat the COVID-19 pandemic.
In March, the CBN suspended forex sales to Bureau de change operators that retail hard currencies to individual users with medical bills and school fees abroad.
As international travel resumes from Aug. 29, traders anticipate a surge in dollar demand, likely heightening pressure on a currency that has been devalued twice so far, and stretching the central bank’s ability to defend the naira.
Nigeria’s Guaranty Trust Bank (GTB) on Tuesday said it could not make dividends payments to holders of its Global Depository Receipts (GDRs) due to difficulties in sourcing dollars.
-With agency report