Naira Down to N345/$ On Panic Buying

The naira weakened to a record N345 to the dollar and N463 to the British pounds on the parallel market yesterday, increasing pressure on the government to devalue the official exchange rate to narrow the gap and spare Nigerians from huge bills for imported goods.
The local currency eased 1.47 per cent from Friday’s close of N340 to the dollar, while the official rate remained at N197.50 to the dollar at the close of trading on Monday.
Traders said the black market rate had slipped as Nigerians with school and medical bills to pay abroad anticipated the central bank would stop allocating currency for such payments. The apex bank has however denied such plans saying it has no immediate intention to end foreign exchange sales for school fees and medicals.
Tumbling global oil prices have battered the Nigerian economy and the currency with foreign exchange reserves down to an 11-year low at $27.83 billion as at February 12, 2016.
The Buhari led government is concerned that further depreciation will hurt poor Nigerians, but the bank’s refusal to revise the pegged exchange rate has widened a chasm between official rates and the parallel market.
“In my own view, the central bank should address the supply side of the market by allowing oil companies and banks to sell dollar to bureau de change operators as an immediate measure to reduce pressure on the naira,” Aminu Gwadabe, acting President of the Association of Bureau de Change Operators of Nigeria said.
Last month, the CBN  halted dollar sales to non-bank foreign exchange operators and allowed commercial banks to accept dollar deposits, in a failed effort to shore up dwindling foreign reserves.
Nigeria earns around 90 percent of its foreign exchange earnings from crude oil exports, but mismanagement of its refineries means it must also import expensive refined fuel, eating deep into its reserves. 

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