The dollar has continued to tower over Naira, hitting N735 in the parallel market yesterday, September 28, as political campaign activities began across Nigeria.
According to Bureau De Change operators in Lagos and Abuja, dollar price had increased from N718 to N720 to N728 and finally to N735 within the last one week.
An operator in Lagos Island, Mallam Zakari, confirmed that dollar rate had surged to N735 as at 4:54pm, saying: “Dollar is N735 and I will buy it for N731. Yesterday, we sold N728.”
However, at the Importers and Exporters Window, rate still hovered around N430/$. The dollar-naira exchange rate was N431.19 as of Tuesday.
Analysts said that the naira had weakened in the parallel market due to increased speculations, falling external reserves, and low foreign exchange inflows.
“Lending rates by banks and other financial institutions will rise following the MPR hike. This will lead to further rise in cost of operations by all businesses, aggravating the rising inflation. This has triggered further demand for dollars to avoid more decline in the value of any funds held in naira.”
According to Idahosa, the commencement of elections also meant that a lot of funds had started pouring into campaign-related activities.
“Beneficiaries of these spending will be converting naira funds received to dollars as fast as possible.”
A BDC operator at Amuwo-Odofin in Lagos, Bala Usman, said: “It is N728. I can’t go less than that.”
Another operator, Abubakar Jamiu, at Zone 4, Abuja, said: “Dollar don cost, we are selling at N730, no more no less.”
An economist at the University of Uyo, Professor Akpan Ekpo, said that the demand for dollar was higher than the supply, especially with the many restrictions by the CBN.
“There are two things: One is, demand for dollars is more than supply. So people are going to the black market. And the process for getting dollars from CBN is cumbersome.”
“Then there’s not much inflow. We don’t export enough non-oil goods and services, and we depend more on oil and the price has declined in the last few weeks.”
Nigeria’s forex reserves stood at $38.5bn on Wednesday, which was a drop by $1.8bn from $40.5bn recorded in January 2022.
Nigeria’s forex reserves stood at $38.5bn on Wednesday, which was a drop by $1.8bn from $40.5bn recorded in January 2022.
Source: The PUNCH
