The naira has continued to come under pressure in the black market despite the sustained sales of US$s by the Central Bank of Nigeria (CBN). The CBN sold about US$700 million in both the forward and spot market last week but the naira still closed on 7 April at N405 to the US$, about N15 weaker than its opening of N390 to the US$.

Foreign exchange traders say that importers are the ones putting pressure on the black market because they are buying US$s from the market to supplement the US$s they are getting from the official market, which are not enough. Even though the CBN has increased the sales of foreign exchange for personal travel and business travel allowance as well as school fees and medical bills, the supply of US$s to manufacturers still remains very low, with many manufacturers claiming that they are getting less than 30% of their demand in the inter-bank market.

The CBN has made a commitment to improve the supply for new letters of credit being opened by manufacturers and other importers but has not met arrears of US$ demand in the market estimated at between US$3-4 billion.

The International Monetary Fund (IMF) in its Article IV Report on Nigeria, released on 3 April, urged the CBN to take steps to close the multiple exchange rates in the market while warning that the country faces the risks of a disorderly exchange rate process if the CBN does not move to correct the multiple exchange rates in the system.

The CBN will continue to ignore the IMF, for now at least, unless there is a clear signal that crisis is inevitable. With the support of President Muhammadu Buhari who has expressed a desire for a strong naira, the CBN governor, Godwin Emefiele, is willing to please the …  [article continues]