Naira weakens to 470 on fresh dollar shortage

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Oyetunji Abioye

The naira tumbled to 470 against the United States
dollar on Wednesday,
down from 455 on Tuesday
as fresh dollar shortage hit the official and parallel
foreign exchange markets.
The local currency has been relatively stable,
hovering around 455 against the greenback in the
last one week.
This came after Travelex and First Bank of Nigeria
Limited commenced sale of foreign exchange to
Bureau De Change operators following the Central
Bank of Nigeria’s approval.

Forex traders, however, said on Wednesdays that
the scheme had failed to ease the biting dollar
shortage in the country.
“What we get from Travelex is not sufficient,” one
trader told Reuters, referring to the demand in the
market.
At the official market, the naira closed at 305.50
per dollar, a level it had maintained for more than
two months, supported by the CBN interventions.
Earlier, the CBN asked international money transfer
operators to sell dollars directly to the BDC
operators to boost liquidity and narrow the gulf
between the parallel market and the official market
rates.
Travelex sells around $15,000 to 1,000 retail
currency outlets weekly, but the amount is a
fraction of what is required to cover the demand
from individuals and small businesses.
Dollar shortages have caused many firms to halt
operations and lay off workers, compounding an
economic crisis exacerbated by the fall in global
oil price, which accounts for 70 per cent of
Nigeria’s budget revenue.
The CBN has struggled to support the naira as the
nation’s external reserves continue to fall. Traders
said the naira had been testing new lows as they
tried to find thresholds where liquidity could begin
to return.

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