Key Takeaways
- Nigerian Naira crashes to the US dollar
- Foreign reserves also reduce as demand for forex increases
- CBN has taken to hostile policies in a bid to control forex supply
According to local news outlet Nairametrics, the Naira fell by 0.05% on the official trading markets to the dollar.
While in the parallel markets, the Naira depreciated by almost 1%, with the official exchange rate of about N523/$.
The national foreign reserve has also been reduced to $33 billion from the previous levels recorded in July.
Meanwhile, the forex turnover has also increased significantly by more than 200% as of Monday, 23rd August 2021.
The central bank has been trying to stabilize the country’s dependence on the dollar. Nigeria imports more than 70% of what it consumes, which has taken a toll on its foreign reserves.
Previously the Central bank conducted weekly sales of Forex to Bureau du Change to meet local demand.
However, the practice only led to a scarcity of forex, with most funds finding their way to the black market.
This led to a decision by the Central bank to stop the sales and suspend licensing of new Bureau du Change in July.
The apex bank has also cracked down on financial service providers that deal in forex business and froze the accounts of several investment companies.
There have been calls from the local crypto community that the CBN should adopt cryptocurrencies as an alternative to the dollar. However, the current policy of the apex bank is hostile to crypto assets.
It should be recalled that the CBN banned banks and financial service providers from processing crypto transactions in February.
However, with the constant increase in Forex rates in the country, crypto could be reconsidered as a potential solution in the future.
Do you think the Nigerian Central Bank can successfully control the rising price of the dollar?
