The naira has come under pressure at both official and parallel market as dollar scarcity heightens.
The local currency has weakened to N470 to dollar at the parallel market and official rates depreciated to N386 to dollar. New restrictions imposed by the Central Bank of Nigeria (CBN) denying dollars for imports of maize and corn are likely to drive sustained pressure on the currency in coming days.
The bar on forex transactions for import of the commodities would take the number of items restricted from the official market to 44.
Murega Mungai , Trading Desk Manager, AZA, an investment and research firm, says while the directive is aimed at encouraging domestic food production through import substitution, widening restrictions on forex transactions further drives trading to the unofficial market, complicating the CBN’s stated goal of unifying multiple currency rates.
The CBN had on July 14, directed banks to stop processing new foreign exchange documents (Form M) for maize imports with immediate effect.
In a circular to commercial banks, the apex bank said it wanted to support the increase in local production, stimulate the economy and safeguard rural livelihoods lost as a result of the COVID-19 pandemic.
The bank asked dealers to submit existing import documents, called Form M, opened for importation of maize by Wednesday.
Form M is a document to be completed by all importers into Nigeria. The documentation also enables lenders submit bids to the central bank for hard currency to pay for the imports.
