Naira weakens to 470 on fresh dollar scarcity

The naira weakened to 470 on Thursday, from 465 on Wednesday, as fresh dollar scarcity hit the official and parallel foreign exchange markets.

The local currency had appreciated to around 450 after security agents carried out series of raids on Bureau De Change operators, who sold the greenback above the N400 stipulated by the Central Bank of Nigeria.

Security agents have been raiding the offices of the BDC operators, ordering them to sell dollar at a lower rate in a bid to break the fall of the local currency.

However, the naira started recording losses gradually again as scarcity of the greenback weighed on the forex markets.

“The clampdown on the black market operators by security agents has negatively impacted dollar supply to the market,” one Bureau de changer operator told Reuters.

Economic and currency experts have said getting security agents after the BDC operators cannot get the ailing naira to stabilise.

At the official market, the naira closed at 305 against the dollar, the level it has closed since August.

The naira is expected to depreciate slightly further in coming weeks at both the official and parallel markets on the back of gradual increase demand for forex by small businesses stocking for the Christmas and New Year sales.

Meanwhile, on the teeming streets of Lagos, the once omnipresent money-changers are going underground.

They’ve become the latest target of security agents in a desperate move by the Federal Government to bolster the naira.

That is creating a parallel market within the black market, according to analysts at Lagos-based Afrinvest West Africa Limited.

One trader in the Lagos suburb of Surulere, who asked not to be identified as he feared arrest, said he would continue using the old rate with trusted customers and refused to sell dollars to others.

“The black market will go further underground,” an analyst at Afrinvest, Omotola Abimbola, said.

“The fact that they went as low as getting security forces on the streets shows a new level of desperation,” he added.