The Central Bank of Nigeria (CBN) adjusted the value of the naira by N6 against the dollar on Friday. Making it the third time the naira would be officially devalued this year.
The parallel market has responded to the fresh devaluation of the naira amidst growing foreign exchange non liquidity. The local currency weakened to N500/$1 at the black market at the weekend.
In a weekly exchange rate for disbursement of proceeds of International Money Transfer Service Operators (IMTOs) issued on Friday, market dealers, including bureau de change (BDC) players and service providers were advised to add N6 to existing rates.
The CBN has sold over $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.
However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
Despite the CBN intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.
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