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As oil prices continue to plunge, Naira follows right after it. As of Friday, Nigeria’s currency was at about 500 Naira/dollar in the black market. There is so much pressure on the Naira as soon as an oil crisis is sniffed in Nigeria and COVID-19 hasn’t made it easy.
Being the prime export in Nigeria, crude oil is in so many ways a problem as almost the entire economy is pinned on it. Nigeria imports almost everything else including refined oil which sucks up the foreign money that they earn.
Naira is a long way from recovering from this fall. This mostly because the dependency in the dollar during a global crisis is strong. Not just investors, even foreign traders in Nigeria want to get their hands on the dollars. They all have a good knowledge of the foreign bank reserve which is dominated by the U.S. at 60%.
What makes the situation of the Naira even worst is the cost of imports as well as local production which follows each other on an upward trend. This is a recipe that expedites domestic inflation and depreciates any local currency.
Read Also: Naira/Dollar at the black market
The Bureau De Change operators plan to return to the market soon after the lockdown. Hopefully, the volatility will be eliminated and the market will become more stable. However, that doesn’t mean Naira will stop seeing such fall.
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