The naira depreciated against the dollar in official and parallel markets yesterday, with many experts predicting the national currency to fall further. At the official Investor and Exporter (I&E) window, the naira fell 2.0 percent to 393.25 Naira per dollar, down from the previous position of 385.50 Naira per dollar.
Most participants in the I&E window maintained bids between N382.00 and N394.83 per dollar. In the parallel market, the naira depreciated 0.8 percent to N 487.00 per dollar.
Lukman Otunuga, senior research analyst, FXTM, said the naira was on the verge of falling further as the Central Bank of Nigeria (CBN) has limited capacity to support its restrictive foreign exchange (forex) management.
"Although the Central Bank of Nigeria devalued the naira by 20% in 2020 in an effort to unify its exchange rates, the naira could be on the verge of falling further as declining reserves complicate the Bank's efforts. Central Nigeria (CBN) to defend the local currency, ”Otunuga said. He said Nigeria's economic situation remained clouded by external and domestic risks, noting that while dollar shortages continue to punish the private sector, inflationary pressures mounting due to border closures and COVID-related disruptions. 19 hit consumers. He explained the negative impact of the decline in the price and production of crude oil on the Nigerian economy, pointing out that while crude oil contributes less than 10% of the gross domestic product (GDP), it is around 90%. currencies. income and half of government revenue. According to him, the Nigerian economic situation has been worsened by its dependence on oil revenues. As oil production fell to 1.67 million barrels per day amid reduced OPEC supply and prices struggled to break from the $ 40 level, revenue d export evaporated. “Essentially, the collapse in oil prices following the pandemic emptied government coffers,” said Otunuga. He noted that the current parallel market rate was the lowest in more than six weeks, as CBN's intervention in the official window failed to keep up with demand.