Forex scarcity sends naira crashing, now N472/$ at parallel market

Foreign exchange scarcity has triggered further fall of the naira in the parallel market where it now exchanges at N472 to a dollar on Tuesday.

The exchange rate was N440/$ in the parallel market in June, and operators have continued to demand for the immediate unification of the multiple exchange rates in the country.

Eben Joels, the senior partner, regulatory and technology, Stransact Partners, said the more worrisome issue was that the gap between the various exchange rates operating in Nigeria created arbitrage opportunities for highly connected individuals.

He worried that some people did not need to work to make billions of naira because they could simply obtain foreign currency at the official rate and sell on the black market.

Joels said, “Some people are cleaning out of this situation. The spread between the black market and the official market is back to about N100 on a dollar.

“It is not that rate that is the issue right now. We need to move to a single unified exchange rate. For all you know, the naira may be underpriced artificially because of the quest to defend the naira.

“Using purchasing power parity, I believe the naira is underpriced and the so-called need to defend the naira by operating several tiers of official exchange rate is part of the systematic theft of national resources going on as we speak.”

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Business organisations in the country had expected the naira to depreciate further in the next few months, according to the CBN’s May 2020 Business Expectation Survey Report.

“Respondent firms expect the naira to depreciate in the current month, next month, next two months and appreciate in the next six months,” the CBN had stated in the report.