Naira Suffers Significant Decline Against Dollar After Buhari’s FX Directive

By Adedapo Adesanya

The foreign exchange (forex) market in Nigeria on Friday reacted negatively to the directive of President Muhammadu Buhari to the Central Bank of Nigeria (CBN) on Thursday ”not to issue a kobo” of the country’s reserves for the importation of food items and fertilisers.

This directive means importers of food and fertiliser will no longer get forex at discounted rates from the government but will have to buy at the black market to bring in their goods into Nigeria.

Business Post observed that at the Bureau De Change (BDC) segment of the FX market yesterday, the Naira came under huge pressure, losing significant value against the United States Dollar at the close of business.

According to data sourced from the Association of Bureaux De Change Operators of Nigeria (ABCON), at the Lagos BDC market, the local currency depreciated against the Dollar by N4 to trade at N454/$1 compared to N450/$1 of the previous session.

However, against the Pound, the local currency closed flat at N585/£1 but gained N29 on the Euro to sell for N530/€1 in contrast to N559/€1 it traded on Thursday.

In Abuja, the local currency depreciated by N14 to close at N454/$1 versus N440/$1 and remained unchanged against the Pound and Euro at N580/£1 and N515/€1 respectively.

At the Port Harcourt BDC market, the Naira lost N12 against the Dollar to quote at N456/$1 versus N440/$1 it was exchanged at the last session. Against the Pound, the Naira lost N17 to close at N603/£1 in contrast to N586/£1 of Thursday and against the Euro, it lost N7 to close at N520/€1 versus N513/€1.

However, it was a different outcome at the Kano BDC market, where the domestic currency traded flat against the Dollar, Pound and Euro at N440/$1, N585/£ and N515/€1 respectively.

At the parallel market, the local currency traded flat against the Dollar at N455/$1 but lost N5 against the Pound to quote at N585/£1 versus N580/£1 and remained unchanged against the Euro at N520/€1.

At the interbank segment of the foreign exchange market, the Naira traded flat at N379/$1.

A look at the Investors and Exporters (I&E) segment of the market showed that on Friday, the Naira appreciated by 17 kobo or 0.04 per cent to sell for N386/$1 compared with N386.17/$1 it traded at the previous session.

It was observed that a decline in the turnover at the market segment yesterday supported the growth recorded by the local currency.

During the session, transactions valued at $20.76 million were recorded compared with Thursday’s $30.8 million, representing $10.04 million or 32.6 per cent decline.