The local currency, the naira lost ground at the parallel market, popularly referred to as the black market as it depreciated against the dollar today.
Information obtained from Abokifx shows that the local currency depreciated to N437 to a dollar on Wednesday, May 6, 2020, as against the N430 to a dollar, it sold the previous day.
The foreign exchange market has experienced an improvement in liquidity, following the intervention of the Central Bank of Nigeria (CBN) and the resumption of sales of dollars to the financial institutions and dealers since May 4.
The naira had hit N460 to $1 last week, its weakest in 3 years as the scarcity of dollars gripped the market. However, the local currency rose to N430 to a dollar at the parallel market which is the unofficial market, following the injection of $100 million by the CBN into the foreign exchange market.
Despite CBN’s intervention, the pressure on the foreign exchange market appears to continue as the easing of the lockdown and start of economic activities has seen the demand for dollars shoot up with importers with past-due obligations scrambling for the scarce foreign currency.
This is compounded by the very low oil prices (the country’s main source of foreign exchange), capital flight by foreign investors and very low remittances due to the global lockdown as a result of the coronavirus pandemic.