THE Naira suffered a major crash today, closing at N710 to one dollar at the parallel market.
The local currency had opened the day at N650 to the American currency at the market, which is also widely known as the black market, but gradually slid to N670, then to N700 and finally closed the day at N710.
Already, businesses are counting their losses, as exchange rate uncertainties put their trading gains on the line.
READ ALSO:
At FMC Abeokuta, almost a billion naira worth of Covid-19 medical intervention may rot away
Rewind: How convicted ex-lawmaker was caught in multi-million naira contracts fraud
Billion Naira Enterprise: Why politicians are rushing to join 2023 presidential race
Although the Central Bank of Nigeria’s official Import and Export (I&E) window remained at N430 to the dollar by this evening, many businesses have always been unable to acces the foreign exchange from commercial banks, which can only satisfy customers’ requests based on allocations from the apex bank.
Unfortunately, the CBN has been long hit by scarcity of foreign currencies, especially the US dollar, as oil earnings, Nigeria’s major area of sourcing foreign exchange, dwindled due to inadequate production and oil theft.
The latest crash of the naira is really bad news, not only for inflationary pressures on the economy, but for businesses, especially importers.
“We cannot even trade our goods because of the exchange rate uncertainty. Customers complain of high cost of goods. We’re largely an import dependent nation and dollar fluctuations affect our businesses,” a dealer in phone accessories at the IComputer Village, Ikeja, Lagos, Thompson Okere, told TheICIR.
The chairman of the Bureau de Change Association of Nigeria,(BDCs), Aminu Gwadabe, who spoke on the development, said the naira woes can only cause more problems to their BDC business.
Gwadabe said, “The depletion of exchange rate is affecting our capital for our businesses. Imagine if you have N5 million to buy $5000, now it may not even buy up to $300.You can see the kind of crisis we are facing.”
On the wide gap between the official exchange and black market rates, he said, “With this, people are currently speculating their buffers and it’s not good for the economy.”
An economist, Tope Fasua, described the current situation as a nightmare.
“On the monetary side, the naira value is becoming uncontrollable. The Central Bank of Nigeria (CBN) is left to carry the can. A gap of, at least, N230 has emerged between the official rate and the more accessible ‘parallel market’ rate.
“This is one of our worst nightmares – perhaps simply the worst – because the exchange rate is tied to inflation and perception,” Fasua stressed.
An economic analyst with the International Labour Organisation (ILO), Celestine Okeke, questioned the economic managers’ silence on the issue.
“The President is not interested, he doesn’t go to the market. The economic managers have accepted that it is a global problem without thinking of any homegrown solution.
“Why do you think that the CBN governor wasn’t asked to resign despite being partisan, and even picking up a nomination form to lead the country,” Okeke asked.
The Senate today resolved to summon CBN governor, Godwin Emefiele, over skyrocketing inflation and naira devaluation.
The resolution followed a motion moved at plenary by Senator Olubunmi Adetunmbi, representing Ekiti North Senatorial District at plenary.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.