Nigeria’s forex problems continues with the Naira falling to a new 43 year low on the parallel market on Wednesday. This new dive is fuelled by strong demand for dollars from importers amid dwindling liquidity.
The Naira to dollar exchange rate eased to 318 to the dollar on the parallel market, having closed at 312 the previous day. At the official interbank window the naira was stable around 197.
“We have demand coming from importers (paying) …their due obligations, while dollar supply has dried up,” said Aminu Gwadabe, head of the association of bureau de change operators.
Africa’s top crude exporter currency has been under pressure on the back of falling global oil price, with Nigeria’s foreign exchange reserves down to a more than 11-year low.
The main stock exchange index gained 0.64 percent to 24,135 points, its highest since Jan 8, when it fell to 23,000 points from around 27,000.
Gains in the shares of petroleum firms Seplat and Mobil help lifted the market, rising between 4 percent and 5 percent.
The Naira, which is currently at its lowest in 43 years, has been the subject of debate in Africa’s largest economy. The International Monetary Fund (IMF), Muhammad Sanusi II, the former CBN governor and Emir of Kano, and many other economists are calling for devaluation of the Naira.
President Muhammadu Buhari and the Central Bank of Nigeria (CBN) have insisted that the naira will not be devalued, with Buhari saying he would not “murder” the currency. The nation’s foreign reserves, however, lost $955 million in the past month, maintaining an 11-year-low, with little or no respite in sight.
Credits: Reuters, TheCable