The continuous fall in the price of crude oil in the international market and the recent devaluation of the nation’s currency, the naira, are putting serious pressure on the economy, with the currency experiencing a free fall.
The naira exchanged for between 192 and 194 to the United States dollar at the parallel or street market on Friday. Earlier in the week, it sold for N188 against the dollar at the same market.
Our correspondents similarly gathered that the pound and euro sold for between N294 and N296, and N236 to N238, respectively on the streets of Lagos on Friday.
The continued fall in crude oil price had forced the Central Bank of Nigeria to use a huge chunk of the nation’s external reserves to defend the naira.
The persistent depreciation of the naira, however, forced the CBN to on November 25 devalue the currency against the dollar by eight per cent from N155 to N168.
The central bank thus expected the naira to sell against the dollar for between N160 and N176.
However, the naira has been selling outside the CBN target band at the interbank forex market (where the banks sell to themselves and their customers), a situation that has fuelled speculation among analysts that the bank may be forced to devalue the currency soon again.
As of Friday, the naira closed against the dollar at N184.50 at the interbank market.
The continued fall in the value of the naira forced the CBN to on Thursday introduce new rules aimed at halting the slide. It barred banks from holding any amount of their funds in dollars.
It also directed the banks and members of the public who buy dollars from it to use them within 48 hours or return the unspent funds.
The implications of the fall in the value of the naira include the fact that manufacturers will have to spend more naira to buy foreign currencies with which they will import raw materials as well as purchase machineries and spare parts.
For Nigerian parents who send their children to schools abroad, paying for tuition in foreign currencies and sending upkeep money to their children will not come easy.
Analysts said the recent policy measures introduced into the forex market by the CBN had made many Nigerians, including importers who need dollars and other foreign currencies, to take to the parallel market.
According to them, parents who want to pay their children’s tuition overseas and importers will have to get their forex in the street rather than wait endlessly at the interbank market.
In a circular on November 6, the central bank said it would no longer sell dollars to importers of electronics, finished products, information technology equipment, generators, telecommunications equipment and invisible transactions at its Retail Dutch Auction System forex market.
School fees fall in the category of invisible transactions.
Consequently, parents who used to buy say $10,000 to pay their children’s tuition overseas for N1.68m, will now need to part with N1.94m, an increase of 15.4 per cent.