– The naira weakened against dollar
– The CBN has launched new actions to strengthened the currency
Foreign exchange dealers said that the naira weakened to 330 against the dollar on February 26, Friday on the parallel market.
The Nigerian currency, which had been on a steady recovery from 391 to 300, reversed its three days’ gain after dollar scarcity reappeared on the forex market.
Meanwhile, the Central Bank of Nigeria is targeting a N200 to dollar exchange rate on the black market.
The official rate of the currency hasn’t change since last year.
The naira is expected to increase in value quickly, as the influence of the CBN’s actions to stabilise the currency instability on the parallel market begin to materialise.
President of Bureau De Change Operators of Nigeria BCON) said the N330 rate on the black market is a progress from last week’s rate when the naira rated for N391 against dollar.
One of the top sources said: “The aim of CBN is to ensure that the divergence between the official and parallel rate does not exceed N3, so we are looking at a parallel market rate of N200/$ because the downward trend in the pressure on the naira will be sustained.
“The CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives, while capitalising on fiscal policies of the federal government to remain in support of non-devaluation of the Naira. The current stand of the federal government on Nigeria’s legal tender is Non-Devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that naira appreciation is going to trend upwards going forward.”
Industry experts have also defined the development as a game changer for mainstream of local manufacturers in Nigeria. The industrialists approved that the influence of CBN activities on forex since, its beginning has more than doubled their productive capacity, with attendant benefits in terms of expansion to meet increasingly higher demands for their products and services.
“Conveniently, since the CBN foreign exchange policy came into existence, production capacity by local manufacturers has increased from 50 per cent to 70 per cent. This has impacted on their propensity to increase exports with higher volumes which is expected to also earn Nigeria commensurate higher foreign exchange earnings,” one of the analysts said.
The naira has shed 25% of its value in the past year. The CBN last devalued the currency by 8% and fixed the official exchange rate at an even lower 198 to the dollar.
Rather than devalue the currency again, the bank has limited access to dollar and barred a long list of imports.
President Muhammadu Buhari instead of devaluing naira has proposed a record budget for the 2016 fiscal year, while Nigeria’s central bank has tried to prop up the failing naira to stem market panic.
However, the economic specialists and policy experts predicted Buhari will allow the naira to weaken to absorb the impact of plunging oil prices.