Naira crashes to N500/$1 at black market as CBN adjusts exchange rate

The local currency weakened to N500 to one US dollar at the parallel market over the weekend through Monday.

This is because the unofficial (parallel market) foreign exchange market has responded to the fresh devaluation of the naira amidst growing foreign exchange illiquidity.

The Central Bank of Nigeria (CBN) weakened the naira for the third time this year as the regulator struggles to stem demand for dollars amid lower than anticipated foreign-currency inflows.

The CBN adjusted the rate licensed bureau de change operators can sell the local currency to N392 per dollar from N386 previously, it said in a circular to dealers on Monday.

Traders will purchase the US currency at N390 from N384 it said, adding that international money transfers will be exchanged at the banks at N388 per dollar from N382.

In a weekly exchange rate for disbursement of proceeds of International Money Transfer Service Operators (IMTOs) issued on Friday, market dealers, including bureau de change (BDC) players and service providers were advised to add N6 to existing rates.

The circular signed by the Director (Trade and Exchange Department) of the apex bank, O.S Nnaji, said the rates would apply to disbursement from Monday, November 30, to Friday, December 4, 2020.

“Weekly exchange rate for disbursement of proceeds of international money transfer service operators’ pegged IMTOs sale of dollar to banks at N388 to dollar; banks sale of dollar to CBN at N389 to dollar and CBN sale of dollar to BDCs at N390 to dollar.

“The BDCs are now expected to sale to end-users at not more than N392 to dollar and each BDC is entitled to buy $10,000 weekly,” the circular read.

However, figures on the CBN’s website show that the apex bank’s official rate remained at N379.5/$ at the close of trading last week.

Governor of the CBN, Godwin Emefiele, had at the 55th Bankers’ Dinner held in Lagos on Friday assured that the country would be able to stabilize the naira on the strength of the size of the reserves.

“Our external reserves,” he stressed, “currently stand above $35 billion and are sufficient to cover seven months of import.”

The President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, had blamed speculators for the persistent crisis in the market. He warned that they would lose money except they stop the anti-market tendencies. (Nigerian Tribune)