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Thursday, May 19, 2022

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Nigeria’s naira hits a new record low of N530 to dollar on parallel market

By Oludare Mayowa

Nigeria’s naira fell to a new record low on N530 to the dollar on the parallel market on Thursday, from N528 a dollar on the same forex window the previous day, traders said.

Also, naira depreciated by 0.04 percent as the dollar was quoted at N411.67 at t the I&E forex market compared with N411.50 a dollar it closed on Wednesday.

Most participants maintained bids between N400.00 and N413.00 per dollar at the official window.

The naira has weakened against the dollar by 6 percent since the Central Bank of Nigeria (CBN) announce its suspension of dollar sales to the Bureau de change operators in abid to support the naira and check malpractices in the forex market.

The regulatory bank has said the bureaux have become conduits for graft and illicit flows of money.

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According to the CBN Governor, Godwin Emefiele, the regulatory bank would channel more foreign exchange to banks for consumers who had legitimate needs, and that it would no longer process or issue new licences for operators of bureaux de change.

“We see the announcement negative for the naira in the parallel market,” analysts at Stanbic IBTC wrote in a note.

In 2016, the central bank banned sale of foreign currency to exchange bureaux to avoid depleting Nigeria’s reserves after a sharp drop in oil prices. The move triggered a fall in the currency on the parallel 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 wide gap between the official naira exchange rate and the parallel market has persisted.

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