The national currency of Nigeria, the Naira, took a sharp dive downwards on Tuesday, November 18, as it fell by 270 kobo, with the parallel market exchange rate rising to N180 per dollar from N177.3 on Monday.
This situation was said to have been triggered by the restrictions introduced by the CBN to curb foreign exchange demand at the official market.
The CBN banned banks from selling dollars to Bureaux de Change (BDCs) and also excluded importation of six items, electronics, finished products, information technology, generators, telecommunication equipment and invisible transactions from official foreign exchange, saying it would no longer sell official forex for their importation.
Thus, the apex bank unwittingly shifted forex demand for importation of the six items from the official market to the interbank market.
The restrictions triggered sharp increase in demand for forex in the interbank market, and scarcity of dollars in the parallel market. This, according to a foreign exchange dealer created a scarcity situation in interbank and the subsequent steady depreciation of the naira.
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