03 July 2015, Lagos – Economic and financial analysts on Thursday predicted that the naira might crash to 250 against the United States dollar at the parallel market in the next two weeks following the trading of the currency against the greenback at 232.
The development means the national currency has lost 6.4 per cent of its value against the US currency within the space of 10 days at the parallel market.
The slide in naira value at the parallel market started last Wednesday when the Central Bank of Nigeria banned importers of 41 items, including rice, textiles and private aircraft from accessing their forex needs at the foreign exchange market.
The naira had fallen to 220, 223, 226.5, 228 and 230 against the dollar at the parallel market in the past 10 days following the new forex rule.
“We are probably heading for a twin economic crisis of high exchange rate and high inflation rate if we don’t quickly nip it in the bud. Going by the way the naira is falling, it may hit 250 against the dollar at the parallel market if nothing is done to reverse the trend,” a currency strategist and analyst at Ecobank Nigeria, Mr. Kunle Ezun, told our correspondent.
“For me, the best thing may be for the CBN to devalue the naira. The truth is that there is no dollar out there at all,” he added.
The Head, Research and investment, Sterling Capital, Mr. Sewa Wusu, said the “onus lies on the CBN to devalue the naira before it is too late.”
He said, “The market is reacting to the expected devaluation of the naira, which ought to have been done before now. What is actually pushing the naira southward is the banning of 41 items from the forex market.
“The CBN needs to devalue the currency. It needs to act fast. Even the foreign investors are waiting on the sidelines for the CBN to devalue the naira. They have stopped investing in naira-denominated assets for now.”
The Acting President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, who had predicted that the naira would hit 230 against the dollar following the new forex rule, forecast the currency to trade at over 250 against the dollar at the parallel market soon.
“Going by the way the naira is falling, it may fall below 250 in the coming weeks,” he said.
The central bank had said it stopped forex sale to importers of the 41 items in order to preserve the external reserves, boost local industries and employment generation.
But the policy, which has pushed huge forex demand from the interbank (official) market to the parallel (black) market and the Bureau de Change retail segment, has led to artificial scarcity of the dollar and other major foreign currencies as operators now hoard them in anticipation of higher prices.