Market News

Nigeria naira at new black market low, widens official rate gap - REUTERS

NOVEMBER 27, 2020


ABUJA, Nov 27 (Reuters) - The Nigerian naira fell 2.02% to a low of 495 on the black market on Friday as dollar scarcity persisted, widening the gap with the central bank's official rate, where the currency has been trading within a range since July.

The naira has weakened on the black market as oil revenues declined and the central bank set policies to restrict access to the official window. That has funnelled demand to the parallel market, which conducts less than 5% of trades.

On Friday, Finance Minister Zainab Ahmed said the government was concerned about the widening gap between the exchange rate on the black market and the official rate, a situation caused by low revenues from oil, Nigeria's main export.

"We have been trying to take measures to close the gap and the progress is not as much as we hope," Ahmed told Bloomberg Television. "The reason why we have the gap is because of the decline in the revenues from the oil and gas industry."

Oil revenues, the major source of foreign exchange for Nigeria, declined the most in about 14 quarters, pushing the economy into its second recession in four years, she said. Officials expects the recession to end by the first quarter.

Central Bank Governor Godwin Emefiele on Tuesday responded to calls for further depreciation of the naira, which has weakened by 28% this year, by saying the black market rate should not be used to determine the naira's value.

"There is high demand and very low supply and the central bank has put in a process where there is queueing ... we do hope that we will be able to get to an even level ... so that the impact on the exchange rate will become moderated," she said.

(Reporting by Chijioke Ohuocha; editing by Alison Williams, Larry King)


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