Observers still see deception in naira gains as dollar falls to N400 at parallel market
The sustained injection of dollars from the growing reserves Wednesday forced the Naira to trade N400 to a dollar at the black market both in Lagos and Abuja, but observers still believe that the entire scenario remains cosmetic and unsustainable at the long run.
Following the Central Bank of Nigeria’s (CBN) intervention in foreign exchange (forex), the Naira traded N400 to a dollar at the black market on Wednesday in Abuja.
To experts, the appreciation of naira will be more convincing if the gains translate to resuscitation of ailing manufacturing sector and other sectors of the economy that had been in comatose due to forex crisis.
Mr. Ken Igboanugo, an economist said “The problem is that there are no other structures backing up the appreciation of naira, meaning that any time the CBn becomes weak, the situation may get worse”.
“CBN had so far spent $1.7 billion to get the rate where it is. Yet it has not improved the production sector because Manufacturing Association of Nigeria (MAN) is still unsure of trend.
Igboanugo noted that “it has not led to inflow of dollars and the economy has not improved its ability to earn more dollar excerpt for oil price increase,” stressing that “We need to focus more on the core issue affecting the naira which includes our huge demand for imported goods.
The Naira has also appreciated against the Pound Sterling and Euro rate as it traded at N510 and N415 respectively.
One of the Bureau de Change operators simply known as Tijanni Jos, said that the development had caused operators to lose a lot of money, hinting that operators did not envisage a quick downfall of the dollar which has caused them to buy at an expensive rate hoping to make returns.
The Nigerian currency also traded at N307.5 at the interbank window.
In other segments of the market, Deposit Money Banks (DMBs) and Travelex, an International Money Transfer Services Operator, sold the Naira at N381 to a dollar.
It would be recalled that CBN Governor, Mr. Godwin Emefiele had on Tuesday, while briefing newsmen on the outcome of the Monetary Policy Committee (MPC) meeting in Abuja, said the apex bank was determined to see the convergence of rates at the foreign exchange market.
While expressing optimism that the rate between the official and parallel market would converge further, he also said that the bank could sustain the policy, adding that those who doubt the ability of the bank to take decisions and implement it were taking a great risk.
CBN also disclosed that the nations’ foreign reserves were trending further to 31 billion dollars even as he warned speculators to desist from stocking dollars at home because the CBN intervention would crash the price of dollar, which was already happening.
