Naira Slides to 405/$ Amid Tight Dollar Supply

• Naira Slides to 405/$ Amid Tight Dollar Supply

The naira slid to 405 against the United States dollar on the parallel market on Friday amid tight supply of the greenback.

This was despite a series of currency forwards sold by the Central Bank of Nigeria this week aimed at clearing demand for the US currency on the official market, traders said.

The local unit had dropped to 397/dollar on Thursday, after hovering between 390 and 395 earlier in the week.

Following series of CBN interventions in the interbank market and fresh dollar injections for invisible transactions, the naira had appreciated to 375/dollar.

Analysts have reacted to the latest rebound of the dollar, saying speculators might be responsible for the loss recorded by the naira.

“The Nigerian economy is an import-dependent one. It is a question of demand and supply and the issue here has to do with liquidity. However, we cannot rule out the activities of speculators in this regard,” a currency expert at Ecobank Nigeria, Mr. Kunle Ezun, said.

The CBN had on Thursday offered $100m in currency forwards to be settled within 60 days.

The central bank has been selling dollars to try to narrow the spread between the naira’s official and black market exchange rates.

On Wednesday, the CBN intervened in the Bureau de Change segment of the market, selling $10,000 to operators aside the $10,000 it sold to them on Tuesday.

The central bank had also on Monday injected $240m into the foreign exchange market.

Specifically, it released the sum of $90m to meet requests for invisibles such as business travel and personal travel allowances, medical and school fees, while the sum of $150m was also made available to authorised dealers in the interbank wholesale auction window on the same day.

Economic and financial analysts said the spate of interventions and dollar supply by the central bank would determine the direction of the naira in the coming weeks.

The naira closed at 306.2 to the dollar at the interbank market on Thursday, same level it closed the previous day.