By Hamisu Muhammad
The Naira has witnessed its worst year in history as it fell woefully against the United States Dollar by 57.8 percent in the interbank and 84.2 percent in the parallel segment in 2016.
The local currency began the year 2016 at 199.5 to a dollar at the interbank segment and ended last Friday at 315/$1. Similarly, at the parallel market it began at 266/$1 and ended at 490/$1.
The currency remains unstable in the most part of the year due to the high demand of forex and short supply from international trade. The country’s main source of forex, oil, remained weak, averaged at $49 per barrel of crude within the period.
Also, the activities of the Niger Delta Avengers, which left several crude supply pipelines vandalised, brought down the production level to nearly a million barrel per day capacity.
The introduction by the Central Bank of Nigeria of the flexible exchange rate policy which ended the fixed exchange rate policy of the bank has plummeted the local currency by about 44.6 percent. In the first day of trading, the naira nosedive from 197 to 285 to a dollar and since then kept reducing in value.
The Naira was not only the currency that witnessed setback against the dollar in 2016, the acting chairman of the Association of the Bureau de Change Operators, Aminu Gwadabe, said.
He said even some major currencies such as the Pound Sterling and Chinese Yuan suffered similar crises against the dollar though the Nigerian case was different.
According to him, the reduction in Forex earning from the sale of crude oil due to the activities of the Niger Delta militants and the fall in the price of oil in the international market worsened Nigeria’s case.
Gwadabe said though the CBN tried its best to manage the situation within the period, the activities at the black market which made the gap so wide between the different rates was responsible for the weakness of the Naira.
He said if government would ensure an end to the different rates as suggested by the finance minister, Mrs Kemi Adeosun, and increase the engagement with the international money transfer operators and other stakeholders by the CBN, that will help stabilise the local currency in the New Year.
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- Oil falls on report showing OPEC deal compliance falling in July – Reuters
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- Naira gains slightly against dollar – Daily Post
- Naira Appreciates in Nafex, Parallel Market – Vanguard