Sequel to the continuous free fall of the Naira at the parallel market on a daily basis, there are strong indications that the local currency may fall to as low as N600 to a dollar.
Recall, that a Lagos based Economist and Financial Expert, Henry Boyo, had predicted that the Naira might dip towards N600 to the dollar, before the year ends.
Boyo had lamented that, “As long as we have not successfully empowered local manufacturers to produce goods and services to compete favourably, there will be continuous influx of imported goods, which will continue to mount pressure on the Naira.“And as such, the dollar will continue to rise even to N600 to a dollar, before the end of the year.”
With the expert advice taken with a pinch of salt, many manufacturing companies, are presently considering closing up shops and moving to other neighbouring countries, with the naira crashing both at the inter-bank market, and in the parallel market.
Post-Nigeria, gathered that despite the introduction of a flexible foreign exchange rate policy, the situation has continued to degenerate on a daily basis, with the naira tumbling from N382 to N390 against the dollar, at the parallel market on Wednesday, August 3, as the scarcity of foreign exchange worsened.
The continuous slide became noticeable, since the introduction of diverse contradictory policies by the All Progressive Congress-led, APC, government.
Besides, the shortage of forex at the inter-bank market, is occasioned by scanty intervention by the apex bank, after it floated the naira, which has led to gradual and continued depreciation of the currency.
After trading around N378 against the dollar for most parts of last week, the naira dropped to 380 last Friday, before falling to N382 on Monday.
The local currency had depreciated from 280 to over 300 per dollar, after the CBN floated the currency completely some weeks ago.
Linking Wednesday’s fall to the summer rush, Economic Analysts have decried that such magnitude of depreciation portend great danger for the economy.
They have argued that since most companies were sourcing forex at the parallel market, due to the scarcity at the inter-bank market, cost of goods and services were set to go up further.
They have argued that since most companies were sourcing forex at the parallel market, due to the scarcity at the inter-bank market, cost of goods and services were set to go up further.
“If the naira continues to fall against the dollar at the parallel market, it means the inflation and the contraction in economic growth we are experiencing now will worsen,” the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said.He added, “Our capacity to defend the naira is getting weaker and weaker. And like I have said before, we need a budget support facility of say at least $10bn, from the International Monetary Fund to stabilise the currency.“We will need this to calm the market and foreign investors will have the assurance to come in.“As it is now, there is no limit the naira will depreciate to now, that the foreign investors will be attracted to come in. We need stability in the market for them to come,” Chukwu said.
Meanwhile, another Economic Analyst and Head, Research and Investment Advisory, Mr. Sewa Wusu, who linked the depreciation of the naira, to the summer rush by holidaymakers abroad, said, “The issue still bothered on scarcity of forex in the economy.”
On the way forward, he noted that it was high time all critical stakeholders made moves to get the economy back on track.
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