Fakoyejo OlalekanNaira depreciates across all foreign exchange markets on Wednesday, as the United States government protects its currency against inflation by increasing interest rates.
In the official forex market, Investors & Exporters window, it was gathered that the naira depleted in value to N420.50 per one dollar, against the N420.27/$1 the FMDQ Securities Exchange posted on Tuesday.
The 0.05% slump was nothing compared to the 1.14% dollar made against the naira in the peer-to-peer market, with the United States currency selling at N622/$1, above the N615 to one dollar the previous day.
In the other unregulated foreign exchange channel, the black market, traders sold one dollar for N605 on Wednesday, in contrast to the N603 buyers parted with at the close of business the day before.
Factors affecting naira against dollars
There are several factors playing in favour of the dollar across all foreign exchange market in Nigeria, which includes the bottlenecks thrown by the Central Bank of Nigeria (CBN) around obtaining forex by the Bureau De Change operators.
The ban on sale of forex to BDC operators has disrupted FX supply, and limited the availability of dollar in the black market, hence, greenback demand pressure weakening the naira.
Also, the United States decision to increase interest rates amid rising inflation, is reducing dollars in the hands of people, thereby cutting the availability in the forex market, as foreign investors seek to invest their cash to hedge against inflation.
The Burea De Change operators have already offered to assist CBN in curbing the rise of dollars against naira by resuming sale of forex to them, as the unavailability is making the cost shoot to the roof.
However, the World Bank has advised against CBN forex intervention, stating that the financial regulator should allow market reality set in rather than the apex bank controlling the growth trajectory by pumping FX into the multiple forex markets at different rates.
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