Naira faces further fall this week – Experts

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Economic and financial experts on Sunday said the naira could fall further this week if the Central Bank of Nigeria failed to do something about the continued depreciation of the currency.

The naira crashed further against the United States dollar at the parallel market to 262 on Sunday, foreign exchange dealers said.

The greenback had sold for N257 and N260 on Thursday and Friday, respectively.

The experts said the N60 margin between the official and black market rates of the naira was dangerous for the economy, adding that it could give room for round-tripping and other sharp practices in the forex market.

“The margin is too dangerous for the market. There is a need to do something about it,” the Head Investment and Research, Afrinvest West Africa, Mr. Ayodeji Ebo, said.

He added that administrative controls imposed by the CBN might have been the remote cause of the fall, while the central bank’s activities in the Bureau De Change segment were the immediate cause.

“The CBN’s action in the BDC segment is right but it is causing the depreciation,” Ebo said.

Analyst at Investment Today, a financial advisory and research firm, Mr. Okunola Henry, said if the CBN continued with its policy measures in the BDC segment, the naira would fall further this week.

“Apart from the need to devalue the naira, there is a need to take a second look at the BDC segment,” he added.

The local currency has been on a steady fall against the greenback at the black market in the past three weeks after the CBN stopped the sale of forex to over 1,500 BDC operators who failed to render returns on the utilisation of previous forex purchased at the official window.

The central bank had during its weekly forex sale to the BDCs over two Wednesdays ago refused to sell forex to operators that failed supply adequate documentation.

The dollar, which was selling for between N241 and N243 before the CBN’s clampdown on the BDC sub-sector, initially fell to 247 and later 251.

Intending international travellers, who depend on BDCs for Personal Travel Allowance and Business Travel Allowance, were hit by the development, which caused dollar scarcity in the black market.

As of Sunday, intending international travellers were still finding it difficult to access forex. It is still unclear if the CBN will supply enough forex to Deposit Money Banks to enable them commence the sale of the PTA and BTA to intending travellers.

Source: Punch