This is not the best of times for the naira. It crashed yesterday to N493/$ at the parallel market, losing N12 to the dollar within 24 hours. It closed on Tuesday at N481/$.
The sharp depreciation came a day after the Central Bank of Nigeria (CBN) devalued the naira at the official market to N410.25/$.
The fall in the currency rate has been linked to dollar scarcity and the hoarding of available greenback by forex speculators to maximize profit.
In an e-mailed guide to investors, Financial Derivatives Company Managing Director Limited Bismarck Rewane, said delayering (unification) of the multiple exchange rate system which had bedeviled the Nigerian economy had been a subject of controversy for a long period.
He said: “Now that it appears settled we should expect a crawling peg method and an increase in forex supply to ensure equilibrium in the market. That notwithstanding, the CBN’s attempt to mop up excess liquidity could serve as a temporary antidote to consumer price inflation which still remains stubbornly high (18.12 per cent).”
Rewane had earlier attributed the naira’s continued decline to heightened forex supply shortage, demand pressure and rationing.
He said naira rates’ convergence would require adoption of a full floating exchange rate system determined by the forces of demand and supply.