The naira appears to have entered a free fall mode with the
local currency selling for 516 per United States dollar on the streets of Lagos
on Thursday.
The naira plummeted at the parallel market from 510/dollar
on Wednesday to 516/dollar on Thursday.
Currency dealers on the streets of Lagos Island sold the
greenback at 516 and bought same for 513. In Egbeda, a major black market
centre in Lagos, the naira was sold for 516 and bought at 510. At the Murtala
Muhammed International Airport, Lagos, the dollar was bought on the parallel
market for 516 and sold at 513.
On Wednesday, the local currency had closed at 507 against
the greenback as acute dollar shortage continued to weigh on the currency
market.
The local currency traded at 507/dollar on Monday and
Tuesday on the black market.
Experts are divided over the outlook for the naira this
year. However, some analysts have predicted that the local currency will take
further beating against the dollar this year.
The Chief Executive Officer, Financial Derivatives Limited,
Mr. Bismarck Rewane, said the local currency would hit 520/dollar this year on
the parallel market and touch 350/dollar at the official market.
An economic expert, Mr. Henry Boyo, has predicted that the
naira will hit 1000/dollar on the parallel market this year if the Central Bank
of Nigeria fails to review its monetary policy framework.
According to him, the current monetary policy framework
adopted by the CBN is skewed against the naira.
Other experts including the CEO of Afrinvest, a local
research and investment advisory firm, Mr. Ike Chioke, says the naira will
depreciate further against the dollar this year unless the CBN reforms the
currency market.
Meanwhile, analysts have predicted that the naira will face
fresh pressure on the parallel market next week with dollar supply falling
short of demand by persons seeking currency to pay school fees abroad as the
CBN continues to ration forex for businesses.
Demand for dollars has soared even though the external
reserves have reached $29bn.
The naira continues to trade flat at the official interbank
window at 305.5 to the dollar.
Traders said demand pressure was mounting on the black
market but dollar supply had not significantly improved, suggesting further
depreciation of the local currency might be coming, Reuters reported.
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