Naira crash at the parallel market link to higher dollar demand, foreign exchange (FX) supply constraints
Written by News Room on July 27, 2022
The naira crash to about 630 Naira to dollar at the parallel market has been linked to higher dollar demand and foreign exchange (FX) supply constraints.
However, the naira exchanges at 415.75 Naira to one dollar, representing over 200 Naira per dollar premium between the official and parallel markets.
Foreign exchangeTrader, AZA Finance, global forex dealers, Ikenga Kalu, said the naira plunged further against the dollar this week, hitting a fresh record low of 630 from 622 at last week’s close.
He said the Central Bank of Nigeria (CBN) recently raised interest rates by 100 basis points to 14 per cent, a three-year high and its second consecutive hike this year.
He said the latest move comes as annual inflation hit a more than five-year high of 18.6 per cent in June, adding that prices of basic staples continue to rise with the government finally caved to demands from petroleum marketers to increase gasoline prices amid tighter supply, raising the cost of a litre of petrol to between N170 and N190 from N165.
Also, a Lagos-based Bureaux De Change (BDC) operator, Abudul Hassan, said the parallel market is where the dollar demand pressure has migrated to, as the CBN finds it difficult to meet demand at the official markets.