The Nigerian naira continues to experience a decline in its value due to the persisting scarcity of the United States dollar, according to findings by FINDWHOSABI.
At the parallel market, the naira started trading at 1,175 naira to a US dollar and closed at 1,190 naira per dollar on Friday. This marks a significant drop compared to two weeks earlier when it was trading at 1,100 naira to the dollar in the parallel market.
However, there was a slight appreciation in the value of the naira on the Investor & Exporter forex window, with the closing rate at 808.28 naira to a US dollar on Friday, up from 810.05 naira per dollar on Thursday, as per data obtained from the FMDQ.
Some Bureau de Change (BDC) Operators revealed that the scarcity of the dollar had made it difficult for them to provide foreign exchange to customers. A BDC operator, Jubril Mutiu, mentioned, “On Friday, the price was 1,175/$, but we don’t even have it. It is not available right now.”
Another BDC operator, Adamu Afeez, added, “We are looking for those to sell to us, but now, we don’t have the dollar to buy. If we don’t have one, we cannot sell.”
Ibrahim Abu, another BDC operator, described how the exchange rate had been fluctuating, with rates increasing from 1,175/$ in the morning to 1,190/$ by 2 p.m. on Friday. He expressed uncertainty about the rate for the upcoming week.
The devaluation of the naira has continued since the Central Bank of Nigeria (CBN) ordered lending institutions to allow the exchange rate to float freely in June. Prior to this, the naira traded at 471.67 naira per dollar on the official market on the FMDQ and 765 naira per dollar on the parallel market.
Dr. Aminu Gwadabe, the President of the Association of Bureaux De Change Operators of Nigeria, stressed the importance of BDCs in achieving a stable and strong exchange rate in Nigeria. He emphasized that the challenges facing the forex market and the depreciation of the naira require the collective effort of all stakeholders.
Gwadabe stated, “The continuous depreciation of the naira in official and parallel markets does not benefit the BDCs and the domestic economy. Hence, steps should be taken to reverse the trend and strengthen the local currency for maximum economic impact.”
He also highlighted the need for BDCs to be involved in providing solutions to the ongoing volatility in exchange rates, alongside measures taken by the central bank to address the exchange rate gaps. Gwadabe acknowledged that market illiquidity remains a significant concern for the BDC sector and expressed displeasure with unlicensed forex dealers engaged in speculative activities that harm the sub-sector’s image.