Naira begins week with depreciation
The naira has depreciated to N980 per dollar at the black market ahead of the takeover of the Central Bank of Nigeria by its new governor, Oluyemi Cardoso, who was last week nominated by President Bola Tinubu.
Bureau de Change traders across major markets in Lagos and Abuja who spoke to THE WHISTLER said they sell N980 and buy N974 per US dollar on Wednesday.
At the official Nigerian Exchange Market, the naira traded as high as N799.9 per dollar before closing at N776/dollar.
The operators traded the currency for N965 per dollar on Tuesday from the N955 that was traded on Friday, September 15, when the presidency announced Cardoso as the new CBN Governor to replace embattled Governor, Godwin Emefiele who has been in the custody of the Department of State Security.
The currency has lost N25 or 2.6 per cent of its value since Tinubu announced Cardoso as the new head of the apex bank.
In June, the apex bank’s acting governor, Folashodun Shonubi introduced a managed float and collapsed all other forex windows into the Investors’ and Exporters’ window now the Nigerian Foreign Exchange Market.
Later in August, Shonubi released operational guidelines to BDC operators mandating them to send records of transactions through the Financial Institution Forex Rendition System (FIFX) as well as dictating the spread on buying and selling by BDCs within an allowable limit of – 2.5% to +2.5%.
The move temporarily drove down the price from around N950 to N845 per dollar.
Cardoso who will assume the post of governor after confirmation by the Nigerian Senate is faced with the issues of price stability and naira depreciation.
Cardoso must “minimize political interference in the use of foreign exchange, which creates arbitrage,” said Ndubisi Nwokoma, a professor of Financial Economics at the Department of Economics of the University of Lagos (UNILAG).
Aminu Abdul, a BDC operator at Zone 4, Abuja who spoke to THE WHISTLER said if the market fundamentals are not fixed, the currency may depreciate further.
Abdul said, “There are many things that are responsible for the depreciation at the black market. One the demand is higher than the supply of dollars we have and so, those who have will sell high. I don’t think there is much that can be done except the supply side is fixed.
“We are expecting it to either rise or fall depending on how fast the government is able to improve dollar supply in the market.”
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