After recording a woeful crash against the dollar at the start of the week, the naira has gained following a major decision by the CBN.
Wads of naira and dollar notes (File photo)
The naira on Tuesday recorded a slight improvement against the dollar as it exchanged at N512 to a dollar at the parallel market. This came about a day after the Central Bank of Nigeria introduced a new foreign exchange policy action.
The naira had suffered a shocking depreciation at the start of the week after it exchanged at N520 to a dollar on the parallel market as scarcity of the greenback continued to weigh on Monday.
Following the depreciation, the CBN announced its decision to begin sale of $1 million weekly to each of the country’s 21 commercial banks at a rate of 375 naira to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates.
Experts said demand for dollar for school fees payment overseas as well as Personal Travel Allowance by intending travellers was taking a toll on the exchange rate at the parallel market.
Meanwhile, currency traders have continued to digest the Central Bank of Nigeria’s new decision to sell dollars to retail users through commercial banks, Reuters reported.
Forex traders told Reuters that some banks had compiled a list of bids from customers awaiting dollars.
The CBN has been selling dollars at N305 to clear a backlog of demand from manufacturing, agriculture and airline companies, hoping also to help drag the country out of its worst recession in 25 years.
Experts are divided over the outlook for the naira this year. Some experts have said the naira may hit between 520/dollar and 1000/dollar at the parallel market this year unless the CBN reviews its forex policy.