COVID-19. More woes as the Naira falls to N450 to 1 Dollar amid FX scarcity

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Nigeria faces another major setback amidst the Covid-19 pandemic as the Naira plummets further to 450 naira per dollar in the parallel market on Friday, April 24, 2020.

Popular foreign exchange rate reporting website, Aboki Fx, listed N450 as the closing price for the naira – dollar rate as of Friday evening.

Within the last three days, the liquidity crisis in the foreign exchange market appears to have worsened as the price at which dealers purchased the dollar went up from N412 per dollar to N428 to a dollar.

However, the naira maintains a stable exchange rate against the pound sterling at N500 to a pound at the time of the report.

The coronavirus outbreak and the drastic fall in oil prices globally have caused serious liquidity crisis in the foreign exchange market. While the global demand for oil drops drastically, Nigeria’s economy is caught in the cross-hairs as oil makes up about 90% of the country’s foreign exchange earnings and about 70% of the Nation’s revenue.

This has led to further pressure in the expenditure of the Nation’s external reserves as it has depleted to about USD 33.8 billion as at April 22, 2020.

The scarcity of the dollar has also led to an increase in demand by importers and speculators as they struggle for the little in circulation. The situation is further worsened by policies put in place to discourage the availability of dollars to Bureau De Change (BDCs) operators in the country.

Even the liquidity crisis is affecting the foreign investors, who are trapped in Nigeria’s debt market after selling their local currency securities in March. They are unable to get dollars to repatriate their proceeds.

This in turn, will adversely affect or mar the frequency and effectiveness of foreign trade in the country.

 

Read also: https://www.herald.ng/cbn-injects-210m/

 

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