The naira tumbled to 520 against the United States dollar at the parallel market on Monday as scarcity of the greenback continued to keep the exchange rate in a free fall mode.
The naira had closed at 516/dollar on Friday, after hitting 510/dollar and 507/dollar last Thursday and Tuesday, respectively.
Experts said demand for dollar for school fees payment overseas as well as Personal Travel Allowance by intending travellers was taking a toll on the exchange rate at the parallel market.
This came just as retail currency traders tried to digest the Central Bank of Nigeria’s new decision to sell dollars to retail users through commercial banks, Reuters reported.
The CBN is planning to sell $1m weekly to each of the country’s 21 commercial banks at a rate of N375 to clear a backlog of demand for retail users and try to narrow the premium between the official and black market rates.
Retail currency users buy dollars from licensed Bureaux de Change operators. However, due to the CBN’s inability to meet dollar demand, the BDCs have tended to source dollars from private sources and resell at a much higher margin, fuelling the black market.
Forex traders told Reuters that some banks had compiled a list of bids from customers awaiting dollars.
The CBN has been selling dollars at N305 to clear a backlog of demand from manufacturing, agriculture and airline companies, hoping also to help drag the country out of its worst recession in 25 years.
Experts are divided over the outlook for the naira this year. Some experts have said the naira may hit between 520/dollar and 1000/dollar at the parallel market this year unless the CBN reviews its forex policy.
An economic expert and Chief Executive Officer of CocoSheen Nigeria Limited, Mr. Henry Boyo, said the naira would hit 1000/dollar unless the central bank reviewed its monetary policy framework.
He said the framework was skewed against the naira.