The Central Bank of Nigeria (CBN) has been holding on to scarce foreign currencies in its coffers, in order to shore up the Naira and prevent a depletion of the nation’s foreign reserves.

However, this hasn’t stopped the country’s currency from weakening further against the dollar, for instance.

This week, the Pound Sterling is exchanging for N610 and the Euro trades for N550.

The Naira fell 1.04% recently as low as N480 to the dollar on the black market.

This comes after the federal government announced that it will reopen airports for international travel on August 29–a move that will increase demand for scarce dollars.

Investors and importers can’t find dollars to buy

The Naira had been stable for over a week on the black market at N475 to the dollar, where it traded at more than 20% weaker to the official over-the-counter spot market.

As the Naira continues its free fall, the CBN is refusing to dispense forex (foreign exchange) to investors and importers.

The CBN is fighting against a depletion of the nation’s foreign-exchange reserves which currently stands at around $35.6 billion.

Naira’s highest currency denomination is the N1000 note (CBN)
Naira’s highest currency denomination is the N1000 note (CBN)
Holders of Nigerian bonds and equities may have as much as $2.5 billion trapped in the country, Simon Kitchen, an analyst with EFG Hermes, said in a note to investors last week.

According to Ayodele Salami who is the Chief Investment Officer at Duet Group, “We’ve been investing across African markets for about 15 years. And in 15 years, Nigeria is the only place where twice in less than five years you have a lockdown or a complete freeze of the foreign-exchange market.”

What this means is that foreign investors who want to buy into the Nigerian market, can’t move their cash out

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