Last Updated on February 2, 2021 by Ope Quadri
Between November 11-November 13, 2020, the interventions of the Central Bank of Nigeria (CBN) seemed to be losing impact as Naira weakened against the US dollar.
It’s N470/1USD at the parallel market at the close of business on Friday, November 13, 2020, a data from abokifx.com revealed.
On November 11, it’s N466/1USD, by the second day if fell further, trading at N468 and by Friday, November 13 weakened further to N470/1USD, its weakest level in more than 30 days.
The naira closed at 382.10 per dollar on the spot market, where the CBN sells limited amounts of the greenback to importers, Bloomberg reported.
The data from Bloomberg further showed that Nigeria’s naira had lost all ground it gained after the CBN started weekly interventions, signalling the continuous existence of pent-up demand for US dollars.
Have CBN Interventions helped?
A few days after COVID-19 lockdown was lifted, the apex bank announced that it’d resume the sales of forex to licensed Bureau de Change operators.
It looks like the solution has come, but the change that followed N/$ at the trading market showed that it was temporary, after all.
It’s predicted to weaken
The weakness of the Nigerian Naira against the US dollar and other “powerful” currencies was predicted by the Managing Director/Chief Executive Officer, Mr Bismarck Rewane a few days ago.
According to him, the pressure on oil prices would limit forex into Nigeria thereby causing a depreciation. His forecast says the naira would weaken in the parallel market and likely depreciate to 470-475 against the dollar in November and December.
The resumption in international flights, trading and manufacturing activities are some of the indicators that would heighten forex demand pressures.
In one of our report, we told you that Nigeria’s foreign exchange reserves fell to the lowest level in more than two months.
The way forward:
We understand that every nation across the world is battling with the impact of COVID-19 pandemic, but the CBN needs to consolidate on its measures to make Naira regains its value on the FX market.