World Bank on Monday said the Nigerian central bank needs to step up efforts to ease pressure on the foreign exchange market to meet the high demand for hard currency in the country.
CBN last Monday resumed the gradual sale of foreign exchange to licensed bureau de change operators in the country just to ease the pressure on naira.
But World Bank country director, Shubham Chaudhuri, told Bloomberg that “continued and even stronger action and a clear commitment from the central bank will go a long way toward facilitating a stronger recovery.”
CBN stopped the sale of forex to BDC operators on March 27th as the country faced an imminent lockdown due to the coronavirus pandemic. Since then, the exchange rate at the black market has gone from N395/$1 on March 27, 2020, to N480/$1 as of August 27, 2020, exactly 5 months later.
The trouble for naira also escalated due to the downward trend of the price of crude, which accounts for more than 90% of the nation’s foreign-exchange earnings.
The Financial Times reported on Thursday that power plant Azura, partly financed by the private-lending arm of the World Bank, could default on its dollar-denominated debt because of the dollar scarcity.
“The Azura case is just one example of the difficulties that a number of established foreign and domestic private firms in Nigeria have had in accessing the forex to meet their business and contractual obligations,” Chaudhuri said on Friday.
Despite the resumption of forex to BDCs across the country, naira is still in a staggering recovery.
According to data obtained from Abokifx, a forex tracking website, naira is still selling at N460/$ as of Monday, September 14, signifying only about N20 appreciation after 8 days.