"Naira collapses to N840\/$ on parallel market as CBN rebrand turns into nightmare"

" Naira collapses to N840\/$ on parallel market as CBN rebrand turns into nightmare \r\n\r\n \r\n \r\n\r\nNigeria\u2019s beleaguered currency, the Naira has slumped to a record low against the dollar on the widely used parallel market as confounded Nigerians rush to buy greenbacks a week after the central bank said it would redesign higher-value notes.\r\n\r\nThe CBN policy has turned into a rout with currency traders in the unauthorized parallel market offering as much as 830-850 naira per dollar on Tuesday in Lagos.\r\n\r\nUmar Salisu, a bureau de change operator who tracks the data in the nation\u2019s commercial capital said tgere is frantic demand for tge dollar.\r\n\r\nThe record low widens the spread between the official exchange rate, which closed at 442.49 to the dollar, to the largest-ever gap of 88%.\r\n\r\nDemand for dollars in Africa\u2019s largest economy has surged since the central bank last month announced a plan to replace 200-, 500- and 1,000-naira notes from mid-December, a policy now described by many as reckless.\r\n\r\nThe old bills will cease to be legal tender at the end of January. The central bank argues that the redesign will mop up excess cash and help it better control money supply, while curbing criminality.\r\n\r\nThe central bank claims that as much as 85% of currency in circulation is outside the vaults of the nation\u2019s banks, as has been the case for decades in Nigeria.\r\n\r\nStreet traders of the currency have had to pool resources in order to meet the increased demand, Salisu said in a Bloomberg interview.\r\n\r\n\u201cBuyers come and we don\u2019t have enough to give them, so we share the business with other traders.\u201d\r\n\r\nIn the capital, Abuja, where rates are generally higher, the naira traded as high as 845 per dollar, while in the northern commercial city of Kano, the rate hit 830, according to street traders.\r\n\r\nNigeria maintains a multiple-exchange-rate regime, dominated by an official spot rate that is tightly controlled by the central bank. In the unauthorized black market, the currency is freely traded.\r\n\r\nFinance Minister Zainab Ahmed warned that the currency redesign may weaken the naira as residents rush to change the old notes.\r\n\r\nBut President Muhammadu Buhari backed the central bank, arguing the move would punish currency hoarders and curb inflation that hit a 17-year high in September.\r\n\r\nEven the president himself must now acknowledge that the policy he has said he endorsed is causing more havoc.\r\n\r\nAfrica\u2019s most populous nation is in the throes of a debilitating inflation crisis caused largely by the volatility of the exchange rate according to leading Economist, Busmarck Rewane who has popularised a model measuring factors responsible for the surge in Nigeria\u2019s inflation.\r\n\r\nThe looming Jan. 31 deadline, when the old notes will expire, is driving the rush for dollars, said Abdullahi Tanko, a currency trader in Kano. \u201cThey are trying to beat the deadline,\u201d he said.\r\n\r\n \r\n "

"Naira collapses to N840\/$ on parallel market as CBN rebrand turns into nightmare"

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