The naira fell 3.2% to N782.38 per dollar in Tuesday’s market-driven Investors and Exporters (I & E) window.
In the parallel market, it was alleged to have traded at N900 per dollar.
The mounting backlog of unmet dollar demand and shortage of the greenback at the official and retail ends of the market are ascribed to the volatility.
The local currency has declined dramatically, owing to an estimated $8 billion backlog of demand in the official market and dollar scarcity in the parallel market.
With a $45 million turnover, the legal market’s supply has also plummeted, and a substantial portion of the demand has spiralled into the parallel market.
Forex dealers said there was a severe scarcity of the dollar, which requires urgent intervention from the Central Bank of Nigeria (CBN) for the rates to retreat.
Dr Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), stated that the naira is fast falling and has become one of the most volatile currencies in recent days.
He argued that the growing difference between the I&E window rate and the parallel market rate has continued incentivising illegal economic behaviour such as speculation, fx holding, arbitrages, and frivolous demands.
He claims that volatility in the parallel market is the most prevalent and harms the economy.
“To immediately address the lingering naira crisis, the CBN should consider revisiting the suspension of BDCs operations into the harmonised I&E window.
“The BDCs remain the potent transmission mechanism of exchange rate stability in the market by enhancing liquidity.
“In the same vein, the Nigeria National Petroleum Company should henceforth suspend any deductions from the sale of crude oil to CBN to help boost reserves and build confidence in supply,” he said.
Gwadabe stated that while foreign investors’ investment decisions are uncertain, the CBN should demonopolize the actors in diaspora remittances and allow BDCs to access their proceeds.
He also stated that IOCs should be permitted to sell their funds openly and transparently to inject liquidity.
Musa Babaiye, a BDC operator headquartered in Booskshop House in Central Lagos, said the market is stressful due to high demand.
He claims that many retail end users who relied on banks to meet their needs are now making purchases on the parallel market.
He stated that BDCs’ purpose in the forex market will continue to address the retail segment’s forex demands.
According to him, increased demand is driven by importers, tourists, and speculators, further straining the market.
