Nigeria’s currency is teetering towards a record-low of N1,500 against the US dollar in the face of a severe dollar shortage in the parallel market.
The exchange rate fell to a fresh low of N1,460 per dollar at the parallel market on Tuesday morning with traders expecting further weakness in the coming days as dollar shortages worsen.
The naira also fell to an all-time low of N1,348.63 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, a 33.87 percent decline compared to the N891.90 quoted on Friday, according to data from the FMDQ.
The exchange rate had hit an intraday high of N1,414.94 per dollar on the day as the daily FX market turnover dropped by 36.68 percent to $64.29 trillion on Monday from $100.97 million recorded on Friday.
Investigations revealed that there is a significant surge in the demand for dollars due to legitimate needs, creating a challenging environment for importers and travelers who heavily depend on the black market.
Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.
Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.
“The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told our roving reporter on Tuesday morning.
