Nigerian Naira declined to 313.5 against the US dollar at the parallel market on Tuesday as forex scarcity persists.
The naira closed at 199.40 to the US dollar on the interbank market, 2.40 above the peg rate of 197.
On Monday, interbank lending rate rose two percent from previous one percent, after Central Bank of Nigeria (CBN) directed commercial banks to fund their naira accounts ahead of its intervention in the forex market on Tuesday.
The overnight lending rates surged by 100 basis points as the liquidity in the financial market dropped due to the movement of naira cash for forex purchases.
The apex bank intervene once a week at the interbank forex market to provide dollar liquidity for eligible importers.
“The overnight rate went up today to three per cent in the early trade but declined to two per cent after some banks funded their forex accounts,” one dealer said.
The naira had plunged last month after CBN discontinued the sales of Forex to Bureau De Change operators and stopped daily sales to the interbank market.
The apex bank in its statement said the measures were necessary to reduce further depletion of the foreign reserves, which have hit 11 year low of $28 billion.
Traders said “commercial lenders’ credit balance with the central bank opened at N978bn ($4.94bn) on Tuesday before the bank called for the funding for forex purchases”.
The central bank requires banks to fund their forex account 48 hours previous to its intervention.