The parallel market yesterday closed with dollar to naira exchange at N600, Naija News understands.
This is as Nigeria’s currency experienced further devaluation amid other crisis.
Some of the key factors identified to be affecting the Dollar to Naira exchange includes election preparation, loss of confidence, and demand/supply.
Stakeholders at the parallel market have expressed disappointment with little or no profit from exchanging dollar to Naira at a more cheaper price that N600.
Naija News understands that the rate at the Importers and Exporters Window on Monday was N415.75, widening the exchange rate spread to N184.25.
Addressing a press at Zone 4 in Abuja, which is the hub of the parallel market in the Federal Capital Territory, two Bureau de Change Operators, Mohammed Isa, and Abu Abdullahi, told journalists that the rate was N599/$ at 10am and 11.14am respectively.
However, the rates for both BDCs changed to N600/$ when they were separately contacted at N3.13pm and N5pm respectively on Monday.
“If I reduce this by N1, I will not be able to make any profit,” one of the two BDCs, Abu Abdullahi told the PUNCH.
At the Lagos airport on Monday, a BDC operator, Adamu Haruna, told The PUNCH that the rate was “N600/$, no more, no less.”
A BDC operator at Amuwo-Odofin in Lagos, Bala Usman, gave an initial rate of N598/$ in the morning but changed to N599 at 2.53pm when contacted.
“The demand is increasing and the dollar is very scarce now,” he said.
Naira has weakened in the parallel market due to increased speculations, falling external reserves, and low foreign exchange inflows into Africa’s biggest oil producer.
The country’s external reserves fell by $313m in March, according to figures obtained from the Central Bank of Nigeria.
Experts in the exchange business outlined politics as a key factor, noting that they see politicians mopping up dollars for election primaries this month, Naija News reports.
In his position, rhe President, of the Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, told journalists that “It is a market where demand and supply determine the price. Do not forget that election years are associated with foreign exchange volatility, coupled with supply squeeze. External reserves, inflation, cost of inputs, and the Russia-Ukraine war are also key issues.”
He argued that there was indeed a loss of confidence, saying that “once people see the exchange rate rising, the confidence will also fall.”
The Director of Research and Strategy, Chapel Hill Denham, Mr Tajudeen Ibrahim, told The PUNCH that the issue in the foreign exchange market could be attributed to falling external reserves and uncertainty in the economy.
“The parallel market is speculative. One of the causes is the foreign exchange reserves. Secondly, there is no indication that Nigeria is going to see an inflow of foreign exchange that can underpin the FX reserves any time soon,” he said.
He added that “There is nothing like Eurobond. There are no indications for other borrowings, so there is no clear indication of inflows. This is also one of the reasons for what we see in the market.”
He also believed that the market could be seeing an election-related demand.
He, however, urged the Central Bank of Nigeria to devalue the naira to match the parallel market rate, while also managing the market to ensure that unforeseen circumstances did not happen.
On his part, the Chief Executive Officer of the Centre for the Promotion of the Private Sector, Dr Muda Yusuf, urged the CBN to float the exchange rate market to provide clarity for investors and allow the market to be determined by the forces of demand and supply.
Yusuf said the CBN’s current approach would continue to deepen distortions in the economy, perpetuate round-tripping, fuel speculation, and suppress forex supply.