Nigeria’s naira depreciates further by 1.28% to N474/$ on parallel market
By Oludare Mayowa
The Nigerian naira depreciated to N474 to the dollar on the parallel market on Monday, down 1.28 percent from last week close as dollar shortage at the official window bites harder, traders said.
The local currency stood at N268 to the dollar on the parallel market on Friday as foreign exchange endusers diverted demand from the official market to the unofficial window.
The naira exchange rate is back at the level it was before the Central Bank of Nigeria (CBN) resume foreign exchange sales to bureau de change in a bid to ease demand pressure and support the local currency.
The rapid depreciation of the naira was coming in the wake of falling foreign exchange reserves, which declined to $35.60 billion by November 13, from $35.68 billion a month earlier.
Expectations that the naira exchange rate will remain stable after the global crude oil rose to $45 per barrel was dashed as the CBN continued to ration dollar to endusers and offshore investors seeking to repatriate their funds out of the country.
The instability in the foreign exchange market has also contributed to the widening inflation rate in the country.
The National Bureau of Statistics (NBS) reported a sharp increase in the consumer inflation rate of 14.2 percent in October from 13.71 percent in the previous month, driven by food inflation and largely by the depreciation of the naira value.
The naira has remained unchanged at N379 to the dollar on the CBN window while it oscillates between N386 to N387 to the dollar on the Investors’ and Exporters’ (I&E) forex window.
Analysts are anticipating another round of devaluation of the local currency before the end of 2020, and this has continued to push up demand for the dollar on the domestic market.
The CBN had twice this year devalued the local currency in an attempt to abolish the disparity between the official and parallel market rates and ensure the unification of the exchange rates in the country.
They also see the inflation rate rising till the end of the year due to increasing food inflation, the recent spike in the fuel pump and currency supply shortages on the I&E window.