The naira has plunged to a new all-time low of N615 against the dollar at the unofficial market amid the scarcity of the greenback, traders told BusinessDay on Friday.
The local currency, which closed at 608/$ a week earlier, has lost 8.13 percent of its value since the start of the year, when it stood at N565 per dollar at the parallel market.
The traders said the dollar shortage had worsened on the back of the demand by would-be pilgrims and summer travellers.
A total of 43,008 pilgrims from Nigeria are expected to join others from across the world to perform this year’s Hajj, according to a media report quoting the National Hajj Commission of Nigeria.
The Nigeria Christian Pilgrims Commission (NCPC) said in May 2022 that it expected that at least 10,000 faithful would go on a pilgrimage from Nigeria this year.
It said the 2022 pilgrimage would begin in Nigeria on May 31 when the faithful would travel to Israel and Jordan.
The exchange rate at the Investors and Exporters (I&E) forex window fell by N0.08 week-on-week to N421.33/$, according to Afrinvest Securities Limited.
“We do not foresee any positive triggers as the pass-through of pressure from naira liquidity and tighter policy in advanced economies continues to depress the naira,” analysts at Afrinvest said.
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said in March 2022 that the naira had remained largely stable at the I&E window, following its demand management policy.
The World Bank said this month that despite the recovery in exports and economic activity in 2021, the CBN’s FX supply in the I&E window declined by 41 percent in 2021 relative to 2020.
At the same time, the Nigeria Autonomous Foreign Exchange (NAFEX) remained broadly stable in 2021, the parallel exchange rate depreciated by as much as 16 percent in the context of FX scarcity.
As a result, the premium between the parallel exchange rate and the NAFEX widened from 21 percent to 37 percent. The CBN has also signalled that it would stop selling FX to commercial banks by the end of 2022, and has introduced an FX repatriation rebate programme in February.
On July 29, 2021, the CBN announced the immediate discontinuance of foreign currency sales to Bureaux de Change operators in Nigeria and channelled the sales of foreign exchange for legitimate needs to the banks.
Nigerian banks had in May commenced a review of dollar request processing time for school fees, upkeep and rent payment, following dollar shortages.
This, according to the banks, was due to the limited foreign exchange availability provided by the CBN.