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HomeTop NewsNigeria's naira weakens to N503 against dollar on parallel market

Nigeria’s naira weakens to N503 against dollar on parallel market

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By Oludare Mayowa

The country’s currency the naira resumed a downward slope on Tuesday after the democracy day public holiday, declined to N503 to the dollar from N502 per dollar previously.

The naira had stabilised at N502 to the dollar on the parallel market for a whole week after the currency depreciated by 3.08 percent in May

The local currency woes began three weeks ago after the last Monetary Policy Committee (MPC) meeting when the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele confirmed that the regulator had adopted the NAFEX forex exchange rate as the benchmark rate for the market.

The naira had traded at N487 to the dollar middle May before the CBN announced the adjustment in the official rate to reflect market-determined exchange rate as required by the International Monetary Fund (IMF) and the World Bank.

Nigeria seeks to borrow $1.5 billion from the World Bank to support its budget deficits and plug the spending gap necessitated by shortfall in revenue due to the impact of the Covid-19.

However, the bank insisted that Nigeria adopt a more flexible exchange rate against the managed float and narrow the multiple exchange rates in the country to qualify for its lending.

Dealers said the naira free fall since the CBN announcement was due to the fact that many Nigerians prefer hedging against further fall by holding their assets in dollars.

READ ALSO: Buhari govt borrows $22.5 bln, N6.08 trln in six years as PDP kicks

Analysts also said the growing inflationary rate has not helped the naira value as many would rather increase foreign assets than domestic assets to preserve their wealth.

The pound sterling has also depreciated to N717 per sterling as of Tuesday with the Euro opened at N608 from N713 to the pound sterling last week and N606 to the Euro.

Last week, the House of Representatives directed the CBN to urgently put in place a policy to check further devaluation of the naira to the dollar and other international legal tenders.

The resolution of the House was sequel to the adoption of a motion of urgent national importance moved at plenary Wednesday by  Bamidele Salam.

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