The exchange rate between the naira and the dollar has depreciated to an all-time low, reaching N1,537.96/$1 at the official market.
This decline has occurred despite various policies implemented by the Central Bank aimed at halting the currency’s devaluation.
In the parallel market, where the naira is also traded, operators have reported to Nairametrics that the exchange rate has hit N1650/$1. However, they note that the actual rate could vary, potentially being lower or higher, depending on the availability of dollars.
An importer shared with Nairametrics that, in a bid to secure currency, he offered to purchase $1 million at a rate of N1,700/$1. Unfortunately, he was unable to procure the dollars, indicating that the supply of the currency is severely constrained.
CBN Policies not saving naira, yet?
The exchange rate has experienced a significant depreciation of 10% since the Central Bank initiated a series of foreign exchange reforms.
These reforms were designed to enhance the supply of foreign exchange while also reducing restrictions on demand.
As of January 31, following a directive from the Central Bank instructing banks to manage their net open positions, the exchange rate stood at N1,455/$1 in the official market but deteriorated to close at N1,577.9/$1.
This rapid depreciation indicates that the market might be skeptical about the effectiveness of the Central Bank’s forex policies, as an anticipated increase in forex inflows has not materialized.
In just the past two weeks, the Central Bank has released over six circulars and implemented policy actions aimed at further liberalizing the sector.
One of the most notable measures includes a move towards a market-driven exchange rate mechanism, which could potentially lead to the Naira being freely floated.
A circular from the Central Bank announced major changes, such as ending the limit on the spread between buy and sell rates in interbank foreign exchange transactions and removing restrictions on the sale of proceeds from interbank transactions.
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