Naira fall comes from Oil theft, fuel subsidy, foreign education

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Naira continues to fall against dollar in the foreign market and the major cause of all this is corruption, oil theft & fuel subsidy.

A similar situation occurred on the black market when dealers took advantage of liquidity issues on the official market to further weaken the Naira on Wednesday evening, devaluing it to N705. The official market exchange rate, which averages N436 to $1, has stayed pretty steady. However, the majority of companies and people do not have access to the official rate.

In addition, the Central Bank of Nigeria lacks sufficient foreign currency due to decreased export revenues, the Naira depreciated 0.11% from N436.00 it traded at in the session before Wednesday’s trading session to close at N436.50, according to statistics logged on the FMDQ website, where forex is legally exchanged.

The parallel market is where more legal requests for currency are being diverted because the official market is unable to meet demand, despite the official market appearing to be quite peaceful. The Naira’s value has fluctuated during the previous three weeks, with the local currency falling from N650 to N705 to the dollar in a matter of days partially caused by oil theft.

Nigeria gets 80% of its foreign exchange from oil earnings, but due to rising oil theft and the cost of fuel subsidies, the country has lost nearly $6 billion in planned revenue this year. Unavoidably, not much productive capacity is being used to the point that it could be a significant source of foreign exchange earnings. Nigeria’s economy is still mostly monocultural and is reliant on the sale of oil and gas.

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