The naira traded for N876 to a dollar at the parallel market on Sunday.
This is consistent with a downward trend of the naira at the parallel market in the last few days, widening the gap, once again, between the official and black market rates.
Some Bureau de Change operators told the Punch that the local currency had earlier exchanged to the dollar at 820 a week earlier.
It would be recalled that the new government of President Bola Tinubu made the bold move of unifying the official and parallel foreign exchange rates upon assumption of office in May.
The move effectively devalued the local currency by about 60 percent.
After Nigeria floated the naira on June 14, the currency jumped from N460 per USD to N780 per USD.
Worse still, the Naira has been on a downward trend at both the official and parallel markets.
The Naira has maintained some integrity on the Investor & Exporter forex window. Data from the official trading platform of FMDQ Securities, indicated that there was a marginal appreciation of the naira by 3.24 basis per cent in the past week, bringing its value to 777.82/$. It ended the previous week at 803.90/$.
However, the local currency has taken the biggest beating at the parallel market due to a combination of factors, chief among which is the scarcity of the dollar.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, in a chat with the Punch identified some factors putting pressure on the foreign exchange market: “Money supply grew by an unprecedented 15 per cent in one month between May and June 2023. Broad money grew by over N9tn, from N55.7tn to N64.9tn. This surge in monetary growth is unprecedented. Obviously, this must have had an effect on the exchange rate.”
He said such dramatic growth in money supply poses a significant risk to macroeconomic stability, especially price stability.
He also said that there had been unmet foreign exchange demand over the last few years, running into billions of dollars as a result of acute illiquidity in the foreign exchange market.
With a more liberalised forex market, he said, the pressure of the backlog of unmet demands and other maturing forex-related obligations had been unleashed on the investors’ and exporters’ window.
