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Naira drops to 226.5 on new forex rules

By on July 1, 2015

The naira fell to 226.5 on Monday against the United States dollar at the parallel market.

The development mean the local currency has lost about 2.8 per cent of its value against the dollar since Wednesday when the CBN introduced a new rule to the foreign exchange market.

The naira was sold for 220 to the greenback before the new forex rule was announced last week.

The CBN, as part of measures to conserve the dwindling reserves, barred importers of 41 items including rice, textiles, poultry products and private aircraft from buying hard currencies at the interbank forex market.

Traders said the dollar might be sold for 230 this week if the trend continued.

Trading on the interbank market, which is pegged around the central bank’s rate of 196.90 naira, was at 198.90 naira on Monday.

The naira had dropped against the dollar from 222 to 225 on Thursday, barely 36 hours after the CBN imposed the new forex rule.

The regulator had said the new rule would help preserve the external reserves, facilitate the resuscitation of domestic industries and generate employment opportunities.

But the ban, which economists said would see about $5.7bn quarterly forex demand by importers of the items move from the official to the parallel market, had continued to fuel artificial scarcity of dollar at the black market and the Bureau De Change segment of the forex market.

The Acting President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, had said.

the hoarding of forex followed the CBN’s new policy banning importers of 40 items from the forex market.

 

[Punch]