Nigeria’s currency, the naira, is in turmoil, falling to its weakest level in six weeks in informal trading as the Central Bank of Nigeria (CBN)’s interventions in the official window has failed to meet demand.
The local unit changed hands for 470 per dollar on Friday, the lowest since September 29, according to abokifx.com, a website that collates street rates in Lagos. The naira closed at 382.10 per dollar on the spot market, where the central bank sells limited amounts of the greenback bank to importers.
The naira has lost all ground it gained after the regulator started weekly interventions, signaling the continuous existence of pent-up demand for the greenback. The Abuja-based central bank resumed sales to licensed bureau de change operators in September after the country opened up international travel following the lifting of Covid-19 restrictions.
The money available in the official window is insufficient to meet demand, Julius Tayo-Olufemi, chief executive officer of Cephas Grace International Ltd., which imports home appliances, said by phone.
“On a monthly basis, I need about $100,000 to $150,000 and the maximum I can get at the controlled price is $20,000. So I have to sort out the remaining balance myself,” Tayo-Olufemi said.
Yearly Christmas season import bill pressure, which usually starts late November and disappears in January, may be coming early, according to Omotola Abimbola, analyst at Chapel Hill Denham.
The regulator has always increased intervention sales to money changers, but “they are a bit hampered this time around,” he said.
-Bloomberg