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Naira depreciates to N410/$ at parallel market

…as CBN assures BDCs of forex supply

As the raging Coronavirus continues its huge toll on the global economic system, particularly for oil exporting countries, the Naira on Thursday depreciated by 9% in exchange for the dollar at the parallel market, slumping to N410/$.

The drop in the national currency’s exchange value is the biggest daily fall against the dollar since 2017, as the exchange rate slumped to N375/$ on Wednesday.

At the Investors & Exporters (I&E) window, the exchange rate lost N1.58 as it rose to N368.33 per dollar from N366.75 per dollar, the most significant daily depreciation the window has witnessed since 2017 when it was introduced.

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Commenting on the market trends, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe in an exclusive chart with Daily Trust said:”Since the event of black Monday when the oil prices dropped considerably, it sent some kind of panic to portfolio investors who started offloading to buy dollar.

“The irony, however, is that with the Covic19 and the strict measure being adopted across the globe, there is no safer destination anywhere.”

He further noted the portfolio investors preferred to keep cash and that has fuelled speculations in the parallel market.

Gwadabe said: “On Monday, we sold at N358 to a dollar but by Tuesday through today, it jumped to an all high of N410 to a dollar.”

He also disclosed that the Central Bank of Nigeria (CBN) has swiftly intervened and cautioned against any form of speculation and that selling of forex to unauthorized end users will be met with stiff penalty.

“Following that meeting, the rate dropped this evening to N370 to a dollar. The CBN assured the BDCs that it will sustain its four weekly bids for the BDCs” he added.

Gwadabe urged BDC operators to be calm and comply with extant rules, adding that demands should be weaker at this point in time, since no one is travelling anywhere with the series of flight restrictions.

Market operators believe that this development is due to increased demand for the dollar as many traders are forecasting foreign exchange scarcity due to crash in crude oil price.

JP Morgan on Wednesday said it expected Nigeria to devalue its currency by around 10per cent. It expects the exchange rate to be N400 per dollar by the end of June.

 

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