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Business News of Thursday, 17 June 2021

Source: www.mynigeria.com

The Nigerian naira has dropped to a four-year low

Naira Naira

In the parallel market, Nigeria's currency fell to a four-year low after the central bank's efforts to persuade banks to sell more dollars to clients failed to close the gap between the official and street rates.

According to abokifx.com, a website that compiles data, unauthorized traders were offering the naira at 502 per dollar on Wednesday, up from 500 the week before.

This is the lowest reading since February 2017. When compared to the current rate of 411.13 naira to a dollar as of 1.55 p.m. in Lagos on Wednesday, the disparity between the official and parallel market rates has widened to 22 percent.

Nigeria, Africa's largest economy, has depreciated its currency three times since March last year, putting pressure on external reserves due to reduced oil revenues, which account for around 90% of dollar profits.

Fearing further depreciation, some Nigerians are converting their naira savings to dollars. The naira is expected to drop to between 440 and 460 per dollar in the immediate term, according to Goldman Sachs Group Inc.

Bank of the United States Last week, Governor Godwin Emefiele met with the CEOs of commercial banks. According to Osita Nwanisobi, a spokesman for the central bank, the institutions agreed to expand dollar supplies and operate special accounts to suit the needs of businesses and travelers.

To relieve pressure on the streets where rates are falling due to excess demand, the central bank employs lenders to make more foreign currency available to purchasers at roughly the official rate of between 410 and 412 naira to the dollar.

"Dollar demand is high; individuals are buying for storage," Abubakar Mohammed, chief executive officer of forwarding Marketing Communications bureau de change in Lagos, the country's commercial capital, said over the phone.

"Any additional bank sales have yet to have an effect."

The growing disparity between official and parallel rates creates arbitrage opportunities, which the central bank says it is actively monitoring. According to a Bloomberg story, the central bank wants consumers to disclose any security breaches to the regulator.

Nwanisobi stated, "The CBN will continue to monitor market trends and is dedicated to ensuring an effective foreign exchange market for all lawful users."