Naira Falls Across Fx Market As Reserve Declines To $27.8bn

This can't continue. Just yesterday again the naira depreciated in value against the dollar across foreign exchange (FX) markets
due to shortage of the greenback.

Specifically, the naira lost N20 or 6.45 percent to close at N330/$, compared with
N310/$ on Friday last week at the parallel market and lost N15 or 4.92 percent against
the greenback at the autonomous market,
closing at N320/$ as against N305/$ last Friday.

Data from FMDQ reveal that the naira depreciated slightly in value, at the interbank market, against the dollar by N0.03k or 0.02 percent, as it closed at N199.37/$ on Monday
from N199.34 last week Friday but the CBN's clearing rate at the interbank market remained
unchanged at N197/$.

In the same vein, Nigeria’s dollar reserves fell to $27.8 billion by February 25, a 1.6 percent decline from a month earlier, according to data from the central bank, on Monday,
representing an 11.91 percent decline from the $31.57 billion recorded a year earlier.

According to analysts at Afrinvest Securities
Limited, dynamics of the Nigerian FX was different last week, as the naira strengthened against the dollar at the parallel market to a
high of N320/$ during the week.

This naira rally was however not unexpected given that the weakness in exchange rate in
the previous week was driven majorly by speculations regarding inclusion of items such as international school fees and health care bills in the list of items banned for FX access at official and interbank markets.

In a bid to stem this speculative pressure, the
CBN last weekend released a circular to douse these fears and affirmed the legality of FX
demand for both services at the regulated markets.

While the unpredictability of BDC and parallelmarket rates continues, the CBN and interbank rates remain unchanged at N197/$ and N199.10/$, respectively.

“We expect pressure to continue to mount on parallel segment rate as a fundamental
demand/supply mismatch for foreign currencies subsists, while liquidity remains weak in the interbank market,” the analysts said.

Source Nigeria voice

Now I ask you. What should be done to avert this calamity upon our economy?