The naira depreciated to N170.50 per dollar at the weekend after maintaining minimal stability of N165.50 two weeks ago in most bureau de change (BDC) outlets in Lagos.
Forex traders attributed this development to slide in foreign exchange supply from the Central Bank of Nigeria (CBN), following sharp reduction in the nation’s foreign reserves.   The nation’s external reserves fell to $47.08 billion in April compared with more than $60 billion in December last year.
The apex bank sold $133.99 million at 146.70 naira per dollar during its retail forex auction on Wednesday, slightly less than the $141.41 million demanded by end-users in the market.
CBN had sold $126.61 million at N146.70 to the dollar on Monday, bringing total dollars sold to $260.60 million at the two auctions during the week as against $276.97 million demanded. The local currency was traded at N148.90 to a dollar at the interbank market on Thursday compared to N148.40 the previous day.
Emeka Chiakwelu, principal policy strategist, Afripol, said the problem is due to rising inflation. Chiakwelu added that the instrument of governance at the disposal of Sanusi Lamido, CBN governor, is capable of improving on the monetary policy. “He can utilise it against inflationary trends by rejuvenating the naira. This must be his top priority,” he said.     
Chiakwelu added that the task at hand is almost overwhelming. He urged the CBN governor to revisit the issue of redenomination and convertibility of the naira to stabilised the economy.
Gloria Ayodele, foreign exchange dealer, Future Trust Bureau De Change (BDC), complained of lack of forex among registered BDC operators. Ayodele added that the recent categorisation of BDCs by CBN has kept them handicapped as they could no longer carry out forex trading as they used to.
According to her, “There is a great discrepancy between BDCs set up by banks and ordinary BDCs in the streets. Bank’s BDCs receive more patronage from CBN than us. We are only left stranded to take care of few smaller customers simply because we could not afford N500 million minimum capital base and the mandatory non-interest deposits of $200,000 that the CBN requested for. This is not fair and we are calling on the new CBN governor to change the policy.”
Analysts had believed that the recent exit of Soludo at CBN would lead to further appreciation of the naira at the interbank forex market. They believe that some of the policies introduced by the immediate past governor of the CBN have helped to minimise the effects of the global financial meltdown on the nation’s economy.
Mr. JKA Olekah, director of banking operations, CBN, had earlier predicted that the naira would stabilise and appreciate as the effect of global financial meltdown subsides.
Standard Chartered Plc said recently that the naira may escape further devaluation if foreign reserves stop declining as oil prices rebound, boosting revenue for Nigeria.