Tension as Naira Crashes Again to 377/1$ at the Parallel Market

The Nigerian currency, Naira has continued its free fall at the parallel market as it dropped 2 points to trade at N377/$1 today, July 27. This comes hours after the local currency had rallied back to regain strength over the dollar, trading at N375/$1 yesterday, from the N378/$1 rate it was on Monday, July 25. However, a Bureau de change source in Lagos state, urged the CBN to integrate only licensed BDC operators into the forex distribution channel. According to him, the dollar is scarce because there is huge demand for the greenback at parallel market.

He said: “A huge amount of demand is going to the parallel market. People can’t even get $1,000 for their personal travel allowance; banks said they don’t have. I think there is a need for the CBN to do something about the forex distribution channel. I believe it is only the BDCs that can do the distribution effectively.”

Although currency traders have blamed the poor performance of the Naira to the scarcity of the greenback, economists have advised the federal government and the Central bank of Nigeria (CBN) to consider alternative policy options to halt the currency’s decline.

This may have prompted the CBN’s decision to issue a directive authorizing agent banks to allow the sale of foreign exchange to BDC operators, but it still remains unknown how soon the policy will be implemented. The CBN had stopped the selling of forex to BDC operators last month after releasing details of its new flexible policy. But in spite of the policy shift, scarcity of dollars has not allowed naira any respite as demand for dollars always outstrips supply. This is possibly why the CBN looks to have withdrawn its decision on BDC operators sourcing their forex from other sources. Meanwhile, you can check out NAIJ.com’s bureau de change ‘market’ here for the best rates on foreign exchange.