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Nigeria’s naira hits new record low of N562 to the dollar on parallel market

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By Oludare Mayowa

The Nigerian naira hit a new record low of N562 to the dollar on the parallel market on Wednesday, down from the N555 a dollar it closed the previous day, as access to dollar in the West African country remain tight.

The local currency has sustained in downward trend since the Central Bank of Nigeria (CBN) announced suspension of dollar sales to bureau de change operators in July to curb speculations.

The naira has depreciated by as much as 12.4 percent on the parallel market since the announcement of new policy which saw the CBN redirecting retail demand for dollar to banks.

Though many banks have put out advertisement announcing availability of dollar for travel allowance, medical and school fee, but many could not access this fund due to lack of liquidity.

As a result of the suspension of dollar sales to BDCs, dollar has dried up in the market as many people are holding on to their dollar to hedge against further depreciation of the local currency.

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A trader said taking away about $100 million liquidity from the BDCs by the CBN has further compounded the woes of the naira as the currency retailers now depend on the trickles of dollars from Diaspora remittances to meet demand at the parallel market.

The naira traded at 412.06 per dollar on the official spot market on Wednesday, with trading range between N400.00 and N414.90 per dollar.

Nigeria is battling dollar shortages brought on by low oil prices following disruptions linked to the COVID-19 pandemic.

The central bank has devalued the currency three times since March 2020, but the naira has continued to weaken.

At the I&E FX market, Naira closed flat at N412.06. Most participants maintained bids between N400.00 and N414.90 per dollar.

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