On the parallel market on Tuesday, the naira depreciated against the dollar to 445 while the exchange rate on the official interbank market was 305 to the dollar. Economic analysts have argued that the fall in naira is linked to the shortage of dollar supply and the fall in external reserves.

“There is [a] shortage of dollar supply. Diaspora remittances have dropped. This is why you can see the rate dropping at the parallel market,” said Mr. Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Limited.

Despite the CBN’S instruction to the commercial banks to sell dollar to the Bureau de Change, it’s however speculated that the BDCs find it challenging to access forex from commercial banks.

“The market is being driven by speculators who are taking advantage of the poor implementation of central bank policy requiring banks to sell dollars to the Bureau de Change operators to ease pressure in the market,” President of the Association of Bureau De Change operators, Aminu Gwadabe told Reuters.

The Central Bank licensed 11 new international money transfer operators last month in its efforts towards boosting the supply of dollar within the economy. It stated during its Monetary Policy Committee meeting that  Nigeria’s external reserve has declined below $25 billion. Data released by the Central Bank reveals that the foreign exchange reserves declined by 3.4 percent from a month ago to its lowest level in more than 11 years.

The fall in naira resulted in the MPC’s action to retain the monetary policy rate (MPR) at 14 percent in order to attract investors. However, the outcome of this decision is yet to be felt in the country.