Naira crashes to N520/dollar as CBN plans increased supply

THE Nigerian Naira has again crashed to a new record low of N520 per United States dollar on Monday, February 20, from N516/dollar on Friday at the parallel market.

This is even as the Central Bank of Nigeria (CBN) plans to sell $1million weekly to each of the country’s 21 commercial lenders at a rate of N375 to clear a backlog of demand for retail users, and reduce pressure on the local currency.

According to a Bureau De Change (BDC) source, currency traders are trying to digest the new Central Bank decision to sell dollars to retail users through commercial lenders.

Retail currency users buy dollars from licensed Bureaux De Change (BDC). However, due to the apex’ inability to meet dollar demand, BDCs have tended to source dollars from private sources and resell at a much higher margin, fuelling the black market.

The local currency also depreciated to N635 against the Pound Sterling from N630 and crashed against Euro to trade at N545 from N540. At the interbank window, the naira exchanged for N305.25 to dollar, N379.2783 to Pound Sterling and N325.2964 to the Euro on Friday.

Traders said commercial lenders have compiled a list of bids from customers awaiting dollars. The central bank has been selling dollars at N305 to clear a backlog of demand from manufacturing, agriculture and airline companies, hoping also to help drag Nigeria out of its worst recession in 25 years.

Last week, the naira started on Monday at N305.50/$1 to the dollar at the official segment, and traded around this level throughout the week. At the parallel market, rate opened the week higher at N506.00/$1 recording depreciations on all five trading sessions and eventually closed at N516.00/$1. The spread between the Official and Parallel market widened to N210.50/$1 last week.