Naira weakens to N480/$1 on plans to re-start international flights

The naira on Tuesday fell 1.04 per cent to N480 to dollar on the black market after the Federal Government said it would reopen airports for international travel in two weeks, a move that could increase dollar demand, traders said.

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

With the price of oil, Nigeria’s main export, depressed and foreign exchange reserves dwindling, its central bank is hanging on to dollars to support the naira – leaving a shortage of hard currency supply for investors and importers.

Currency markets anticipate an increase in demand with airports having been closed since March 23 to all but essential international flights as part of efforts to combat the COVID-19 pandemic.

In March, the central bank suspended forex sales to retail currency bureaus that resell hard currency to individual users with medical bills and school fees abroad.

As international travel resumes from August 29, traders anticipate a surge in dollar demand, likely heightening pressure on a currency that has been devalued twice so far, and stretching the central bank’s ability to defend the naira.

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