The naira plunged to a record low of N925/$1 on the parallel market on Wednesday, August 9, 2023 with apprehension of the prospects of the dollar crossing the N1,000 mark before year end.
Traders in Abuja on Wednesday quoted the exchange rate as high as N915/$1 for cash trades.
Similarly, the dollar exchanged for between N880 and N890 in Lagos, the commercial capital of Nigeria.At the Murtala Muhammed International Airport, Ikeja as well as Allen Junction, it was noticed that the greenback was bought for as high as N890 by Bureau De Change operators in the state.
However, the operators sold it for between N900 and N905.An operator at Allen Roundabout in Lagos, Ismail Muhammed said: “The dollar has not reached N900 in Lagos. We are buying for N890 at the moment”.
In Kano, it was gathered that while the parallel market closed on Tuesday with a dollar trading to a naira at N900, it opened at N919 to a dollar on Wednesday as against the N750.2/dollar at the I&E market, signifying a gap of about N169 between the parallel market and the I&E market.
However, around 1pm, the price further surged in Kano’s Wapa Forex Market to N925 to a dollar.Meanwhile, in the official Investor and Exporter Window, the exchange rate closed at N757.81/$1 while the NAFEX rate was N776. The official market also faces supply constraints, with daily turnover averaging $80 million since July.The peer-to-peer market, where cryptocurrency traders exchange forex, also saw the exchange rate soar above N900/$1.
However, the Managing Director of Cowry Asset Management, Dr Johnson Chukwu said the basic underlying factor in the continuous widening of the gap between the I&E window and the parallel market is undersupply of the dollar for the available naira.
Chukwu, while reacting to the stability in the I&E window amidst wide drift in the parallel market, said: ‘The official market is no longer reflective of the market dynamics.
Reacting to what the government can do to arrest the free fall, Chukwu said: “We are already in a bind, I don’t see the federal government accepting a short-term balance sheet support.
“We are heading towards a point where dollarisation will kick in. I don’t know where that point is right now but we are in a deep mess.”
