The Nigerian currency, the Naira on Tuesday morning dropped and is currently trading at N472 to one United States Dollar at the parallel market as foreign exchange scarcity keeps persisting.
The Naira’s exchange rate to the US Dollar was only 440 in the parallel market just about a month ago in June. This sharp drops has forced operators to demand that the need for an immediate unification of the multiple exchange rates across the country.
The Senior Partner, Regulatory and Technology, Stransact Partners, Eben Joels, said that the critical issue at the moment is the amount of gap that persists among various exchange rates operating in the country. He believes that this has created an opportunity for arbitrage and profiteering by certain highly placed and well-connected individuals.
He says that he is worried that some people could just make billions of Naira easily at the detriment of the Nigerian economy and its citizens, just because they can simply obtain foreign currency at the official rate and sell them on the black market.
Joels said, “Some people are cleaning out of this situation. The spread between the black market and the official market is back to about N100 on a dollar.
“It is not that rate that is the issue right now. We need to move to a single unified exchange rate. For all you know, the naira may be underpriced artificially because of the quest to defend the naira.
“Using purchasing power parity, I believe the naira is underpriced and the so-called need to defend the naira by operating several tiers of official exchange rate is part of the systematic theft of national resources going on as we speak.”
As things stand, many businesses hold the view that the Nigerian currency could experience worse depreciation with the coming months. This forecast is corroborated by the Central bank of Nigeria’s (CBN) May 2020 Business Expectation Survey Report.
“Respondent firms expect the naira to depreciate in the current month, next month, next two months and appreciate in the next six months,” the CBN had stated in the report.
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