The Central Bank of Nigeria (CBN) is expected to devalue the naira by as much as 10 per cent this year in the face of lingering dollar shortage in the country.
This is according to a survey by Bloomberg.
The exchange rate disparity between Nigeria’s parallel market – black market – and official market is about N83.67 ($0.22) representing a 21.2 per cent devaluation differential.
To streamline forex supply and ensure there is enough to meet rising demand, the CBN has moved to ensure strict monetary control of the forex market threatening to expel exporters who refuse to remit foreign exchange proceeds in the NAFEX market.
On January 28, 2021, the exchange rate between the naira and the dollar depreciated closing at N394.33/$1 at the NAFEX where forex is traded officially.
Also, the exchange rate at the black market where forex is traded unofficially remained stable at N478/$1. The exchange rate at the parallel market closed at N478/$1 on the previous trading day of January 27, 2021.
The weakening of the naira could be attributed to demand pressures and forex shortage as dollar supply by the CBN declined further by 27 per cent.
The CBN in a monetary policy communique on January 26, confirmed forex pressures faced by Nigerian businesses and the resultant depreciation of the naira saying, “This weak performance was attributed to the resurgence of the pandemic, foreign exchange pressures, increased costs of production, a general increase in prices and decline in economic activities.”
