In the parallel market, the Naira fell to a four-year low after the Central Bank of Nigeria (CBN) failed to persuade banks to sell more dollars to clients, widening the gap between official and street rates.
According to abokifx.com, black market dealers were offering the naira at 502 per dollar on Wednesday, up from 500 the week before.
Since February 2017, the current rate has been at an all-time low. When compared to the spot rate of 411.13 naira to a dollar at 1.55 p.m., it extends the disparity between the official and parallel market rates to 22 percent. Lagos is the capital of Nigeria.
The current rate depreciation of the naira did not occur in a vacuum.
According to the Consumer Price Index report released by the National Bureau of Statistics on Tuesday, Nigeria’s inflation rate fell for the second month in a row to 17.93 percent in May 2021, down from 18.12 percent in April 2021. (NBS).
The consumer price index (CPI), which monitors inflation, rose 17.93 percent year over year in May 2021, according to the study. This is 0.19 percentage points lower than the April 2021 rate (18.12 percent ).
he closely watched index dropped from 22.72 percent recorded in April 2021 to 22.28 percent in May 2021, indicating the second consecutive decline in the food index.
On a month-on-month basis, the food sub-index increased by 1.05 percent in May 2021, up by 0.06 percent points from 0.99 percent recorded in April 2021.
The Nigerian economy has caused the Naira to devalue three times since March last year, as decreased oil income, which accounts for nearly 90% of dollar profits, has put pressure on external reserves.
As a result, many Nigerians are converting their naira savings into dollars in order to avoid further depreciation. The naira is expected to drop to between 440 and 460 per dollar in the immediate term, according to Goldman Sachs Group Inc.
According to Osita Nwanisobi, a spokeswoman for the CBN, Governor Godwin Emefiele met with chief executives of commercial banks last week, and the lenders agreed to expand dollar supply and operate special accounts to satisfy the needs of businesses and travelers.
To relieve pressure on the streets where rates are falling due to excess demand, the central bank plans to employ lenders to make additional foreign currency available to customers at roughly the official rate of between 410 and 412 naira to the dollar.
“Dollar demand is high; people are buying for storage,” Abubakar Mohammed, chief executive officer of Forward Marketing Communications bureau de change, said by phone from Lagos, the nation’s commercial hub. “There is no effect yet from any increased sale by the banks.”
Surging inflation, according to the World Bank, is hurting Nigeria’s economic recovery, forcing 7 million Nigerians into poverty and promoting criminality as soaring costs deplete already restricted incomes.
Follow us on Twitter