The 2023 political campaigns began officially on Wednesday in the country, and the dollar hit N735 in the parallel market.
According to Bureau De Change operators in Lagos and Abuja, dollar prices had increased from N718 – N720 to N728-N735 in the last week.
According to the source, a BDC operator Abubakar Jamiu, at Zone 4, Abuja, told the PUNCH, “Dollar don cost, we are selling at N730, no more no less.” But the dollar rate hit N735 by the close of Wednesday.
However, the dollar-naira exchange rate was N431.19 as of Tuesday.
Analysts said the naira had weakened in the parallel market due to increased speculations, falling external reserves, and low foreign exchange inflows.
Speaking on the factors that resulted in the increase in the dollar-naira exchange on the parallel market, Vice President Lagos Chamber of Commerce and industry, Gabriel Idahosa, said that the cause of this hike was caused by the new Monetary Policy Rate of the Central Bank of Nigeria.
“The immediate cause of the dollar price hike is the increase in the Monetary Policy Rate from 13 percent to 15.5 percent announced by the Central Bank.
“Lending rates by banks and other financial institutions will rise following the MPR hike. This will lead to a further rise in the cost of operations by all businesses, aggravating the rising inflation. This has triggered further demand for dollars to avoid more decline in the value of any funds held in naira.”
According to Idahosa, this could be because of the forthcoming elections which means that more funds have been channeled to campaign-related activities.
“Beneficiaries of these spending will be converting naira funds received to dollars as fast as possible.”
Another economist, Prof Akpan Ekpo at the University of Uyo, said the demand for dollars was more than the supply due to the demands of CBN.
“There are two things: One is, demand for dollars is more than supply. So people are going to the black market. And the process for getting dollars from CBN is cumbersome.”
“Then there’s not much inflow. We don’t export enough non-oil goods and services, and we depend more on oil and the price has declined in the last few weeks.”