Nov 29 (Lagos) - The Naira has come under fresh pressure in the parallel market having depreciated to N473 per US dollar following the decision of the Central Bank of Nigeria (CBN) to slash dollar sales to Bureaux De Change (BDCs) by 46%.
The CBN also directed raids against some BDC's who they blame for Naira weakness.
The BDC's keep charging huge spreads on Dollars they obtain from Travelex.
CBN seems stumped when it comes to controlling the free-fall of the Naira.
Some analysts expect Naira to hit 650 - 1 Dollar levels on the parallel market within the next 30-40 days. We hope they are wrong.
Naira cannot gain until Nigeria starts to earn US Dollars through exports or borrows from IMF. The export option is crippled by the Niger Delta militants and the Nigerian government does not seem to have control over the area. The IMF loan is getting blocked in the senate.
So the outlook for the Naira is weak.
CBN refused to increase interest rates during its last monetary policy meet, a move that could have supported the Naira.
Now we the people will pay for their mistake.
Inflation is expected to keep on rising and if the Naira weakens more, inflation may hit 20%.
reporting for easykobo.com on Tuesday, Nov 29 2016 from Lagos, Nigeria
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