The naira tumbled significantly at the parallel market on Thursday, hitting 391 against the dollar as foreign exchange scarcity continues to batter Africa’s biggest economy.
The currency appears to have entered into a free fall mode against the dollar at the black market, having lost 26 per cent of its value in less than two weeks.
The naira had exchange for 372 to one dollar on the streets of Lagos, Abuja and other major cities on Wednesday.
The local currency, which closed at 310 against the greenback last Monday, has been falling consistently and significantly in the past 11 days.
Forex dealers and financial experts linked the persistent fall of the naira to panic buying of the dollar and other major foreign currencies by importers, individuals and businessmen.
Bureaux De Change operators in Marina, Ikeja and Apapa in Lagos, and Abuja, told our correspondent on Thursday that there were no signs yet that the rising demand for forex, especially the greenback, would abate any time soon.
A BDC operator in Ikeja, Hamidu Bashir, told our correspondent that the high demand for dollar might decline over the weekend.
He, however, added that the high demand pattern would likely continue next week, a situation that might compound the naira’s woes.
According to a currency strategist at Ecobank Nigeria, Mr. Kunle Ezun, the falling naira-dollar exchange rate at the parallel market has to do with the fundamental problem of inadequate forex supply that the nation is grappling with.
He said, “Unless we do something about the supply problem we are having with the foreign exchange reserves, it is a simple and basic economics law – the demand is far above supply. We don’t have the forex supply that can match our demand. The naira may sell for over 400 against the dollar over the next weeks because it is still falling.
“In my own opinion, we may be forced to freeze importation of non-essential items in the near future. There are many solutions but a drastic action may have to be taken if things continue this way.”