Naira drops to 241 against dollar

The naira hit another record low of 241 against
the dollar at the parallel market on Monday as
the Central Bank of Nigeria’s restrictions on
foreign exchange sale fuelled unofficial trade in
dollars, Reuters reported.
The ban on importers from accessing the Nigerian
foreign exchange markets for the importation of
41 items had led to the volatility of the naira-
dollar exchange rate at the black market.
Since June 23 when the new forex rule became
operational, the naira has fallen by 10.5 per cent
from 218 to 241 against the greenback.
Foreign exchange dealers said the artificial
scarcity of the United States currency still
pervaded the market.
The new forex rule had led to huge demand at the
parallel market, causing dealers to hoard the
dollar in anticipation of further fall in the naira
Economic analysts had said the CBN needed to
devalue the naira to allow the local currency
achieve an equilibrium price against the dollar.
The central bank had however said it would not
be focusing on the thinly-traded parallel market
when determining the exchange rate, adding that
people preferred to use the unofficial market for
undocumented transactions.
Foreign investors had been on the sideline,
waiting for the CBN to devalue the naira before
investing in naira-denominated assets.
Local and foreign analysts had predicted that the
naira might hit 250 against the dollar at the
parallel market any time soon if the artificial
scarcity trend continued.
The central bank appears to be in a fix as the
spread between the official and parallel market
continues to widen by the day.
Meanwhile, stocks fell to a more than three-
month low and the naira on Monday, Reuters
reported.
The local bourse, which has the second-biggest
weighting after Kuwait on the MSCI frontier
market index, dropped for the ninth consecutive
day as investors shed banking, consumer and oil
shares.