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Why Naira depreciates against US Dollar — CBN

Naira exchanges at 409.11 against the US Dollar, according to data on the CBN website as of August 16, 2021.

The Central Bank of Nigeria (CBN) has blamed the sharp depreciation of Naira against the United States Dollar on the COVID-19 pandemic, shortage in foreign exchange supply and other factors.

CBN Deputy Governor, Corporate Services, Edward Adamu, disclosed this on Monday while responding to questions from members of the House of Representatives Committee on Finance during the 2022-2024 MTEF/FSP stakeholders interactive session on Monday.

Naira exchanges at 409.11 against the US Dollar, according to data on the CBN website as of August 16, 2021.

The CBN had, last month, banned sales of foreign currency to Bureau De Change operators. The apex bank said the BDC operators have become conduits for graft and illicit flows of money.

He said the COVID-19 pandemic had a devastating effect on the country’s economy and reduced the availability of foreign exchange.

According to him, crude oil sales, which is the major source of forex for the country, dropped drastically last year.

“We have proceeds from the sale of crude oil, we have foreign portfolio inflows and remittances; those are the three major ways that we get forex.

“Crude oil sale has not been as high as we all want it to be and obviously in the aftermath of COVID-19, the global economy was grounded to a halt and the use of crude oil also was reduced.

“Sometimes in April last year, we had crude oil selling at a negative money, which means that people were being paid to store what they bought and so avenue for forex inflows was significantly reduced,” he said.