The naira crash to about N630 to dollar at the parallel market has been linked to higher dollar demand and foreign exchange (FX) supply constraints.
However, the naira exchanges at N415.75 to one dollar, representing over N200 per dollar premium between the official and parallel markets.
FX Trader, AZA Finance, global forex dealers, Ikenga Kalu, said the naira plunged further against the dollar this week, hitting a fresh record low of 630 from 622 at last week’s close.
He said the Central Bank of Nigeria (CBN) recently raised interest rates by 100 basis points to 14 per cent, a three-year high and its second consecutive hike this year.
“The latest move comes as annual inflation hit a more than five-year high of 18.6 per cent in June. Prices of basic staples continue to rise. The government finally caved to demands from petroleum marketers to increase gasoline prices amid tighter supply, raising the cost of a litre of petrol to between N170 and N190 from N165 – a move that has eased queues at filling stations,” he said.
“According to him, bread makers are protesting against their surging costs – flour, sugar, diesel – by suspending production. Against this backdrop and amid higher dollar demand and ongoing FX supply constraints, we expect the Naira to lose further ground in the coming days,” he said.
Also, a Lagos-based Bureaux De Change (BDC) operator, Abudul Hassan, said the parallel market is where the dollar demand pressure has migrated to, as the CBN finds it difficult to meet demand at the official markets.