The outbreak of the COVID-19 pandemic, shortage in foreign exchange supply and other factors, have been blamed by the Central Bank of Nigeria (CBN) for the sharp depreciation of Naira against the United States Dollar.
Edward Adamu, the CBN Deputy Governor, Corporate Services, 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.
According to data on the CBN website as of August 16, 2021, Naira exchanges at 409.11 against the US Dollar.
In July, the apex bank banned sales of foreign currency to Bureau De Change operators, stressing the BDC operators have become channels for graft and illicit flows of money.
Adamu further stated that the COVID-19 pandemic had a devastating effect on the Nigeria’s economy and reduced the availability of foreign exchange.
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Crude oil sales, which is the major source of forex for the country, dropped drastically last year, Adamu said.
He stated:
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.