The Nigerian Naira currency lost more ground against major currencies on May 25, 2021, after depreciation of 493 naira for one dollar in the black market. Prior to the latest depreciation, the currency had stabilized at around 485 Nairs of the dollar. This was shortly after the exchange rate for a dollar plummeted to a three-and-a-half year low of 500 Nair in November 2020.
Pressure on naira again
As one Report good The Naira’s latest depreciation comes just one week after the Central Bank of Nigeria (CBN) devalued more than 5% of the currency, it says. As before Reported By Bitcoin.com News, CBN recently allowed the exchange rate of Naira to decrease from 393 per dollar to about 410 per dollar.
However, the same currency devaluation has prompted the latest depreciation of the naira on the parallel market. Meanwhile, a different Report good The renewed pressure on the Nigerian currency is attributed to “black market speculators who have taken advantage of the newly adopted exchange rate of the CBN to exploit and accumulate dollars.”
Further devaluation expected
Meanwhile, the same report also cited analysts at local stockbroking firm CSL, describing how Nigeria’s foreign exchange demand backlog will continue to pressure Naira in the short term. Analysts continued:
Thus, the CBN will probably devalue the I&E rate by around 5.0 -7.0 percent by the end of the year to unlock FX liquidity, attract new foreign portfolio investment (FPI) flows, and curb current account imbalances. It is estimated to reach US $ 10.80. Billion (2.1% of GDP) in 2021.
Prior to the devaluation of the Naira, multilateral lending institutions such as the World Bank and the International Monetary Fund insisted for the integration of many of Nigeria’s exchange rates. According to CSL Stockbrokers, integrating Nigeria’s exchange rates sets the tone for “further funding from multilateral bodies”.
Starting in 2017, Nigeria started using multiple exchange rates, which the CBN continues to defend. While the central bank emphasizes its decision to ration foreign exchange is in the best interest of the country, the policy has nevertheless received widespread criticism.
What are your thoughts on the latest depreciation of the naira against major currencies? You can share your thoughts in the comment section below.
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