The local currency, naira, resumed its slide against the dollar at the parallel market yesterday, falling to N505/$1 from N502 per dollar on Monday, according to abokifx.com. In the wake of the Central Bank of Nigeria (CBN)’s adoption of the Investors and Exporters’ (I&E) window -NAFEX – rate as the official exchange rate late last month, naira started depreciating on the parallel market, plunging to N502/$1 on June 7. Until yesterday’s decline, the local currency seemed to have stabilised at N502 per dollar rate on the parallel market after CBN announced that it would increase FX allocations to deposit money banks to enable them meet travel allowance requests and tuition payments, amongst other invisibles.
While data obtained from CBN and FMDQ websites shows that there was not much change in the value of naira as the official exchange rate stood at N410.12 per dollar and N411.75/$1, respectively, analysts predict that the local currency would remain under pressure in the coming months. For instance, in a note at the weekend, analysts at Coronation Research, said: “Last week, the exchange rate in the Investors and Exporters Window (I&E Window) strengthened by 0.30% to close at N410.75/$1. However, in the parallel (or street) market, naira weakened by 1.41 per cent to close at N502.00/$1, the lowest level since February 22, 2017 (N505.00/$1).
The move has widened the gap between the two market rates to 22.22 per cent. “Despite the efforts of CBN to increase U.S. dollar supply to the I&E Window and NAFEX market, we expect the parallel rate and the I&E Window rates to continue to be under pressure over the months to come.”