Naira Depreciates Against the Dollar on Parallel Market on Friday

• Naira Depreciates Against the Dollar on Parallel Market on Friday

Naira continues its downward slide against the US dollar on the parallel market on Friday, according to the Abokifx report.

The local currency declined by N3 from N447 per US dollar it traded on Thursday to N450 on Friday.

While, against the British Pound, the Nigerian Naira was exchanged at N545 a pound on Friday, down from N543 it was sold on Thursday.

This same trend continues against the European single currency as the Naira slid from N470 it traded on Thursday to N472 on Friday.

On the Investors & Exporters FX Window, the Naira which opened the day at N387.75 to a US dollar moderated to N386.50, largely due to the surge in volume traded to $112.89 million. That was the same rate it traded on Thursday.

However, the official rate of the Central Bank of Nigeria remains N361 to a US dollar.

Despite efforts to support and prop up the value of the Naira, the Nigerian currency remains weak amid growing economic uncertainties.

A recent report by Investors King revealed that the CBN has been moping up Naira in circulation to reduce demand for the US dollar and better manage the weak foreign reserves.

A banker, who spoke on condition of anonymity, said the apex bank debited 26 banks a total sum of N459.7 billion on Thursday for failing to meet 27.5 percent Cash Reserve Ratio target.

According to him, the apex bank is hurting banks’ ability to purchase or demand for forex despite campaigns to stimulate and support businesses impacted by the COVID-19 pandemic.

He said “You know the central bank also does what we call retail FX intervention, that is when they sell FX to corporates. Now, because they don’t want banks coming with huge demands, what they do is that a day before the FX sales, they debit the banks so that the naira you have available is small and you cannot put them under pressure because of your FX demands. That has really been the driver.”

Even with the apex bank devaluing the Naira to slow down capital outflow, foreign investors continue to demand for forex through various Nigerian banks to move their money out of the country. A move capable of hurting the nation’s foreign reserves and impede the apex bank’s ability to intervene in the foreign exchange market.

“We understand that the central bank had set up a special CRR team that is supposed to monitor banks’ CRR once a month. But now, the team monitors banks’ CRR on a weekly basis. This is why the central bank is effectively debiting banks on a weekly basis. Some weeks ago, they debited some banks about N1.4 trillion. That was one of many. Between that time and now, there have been more debits that have happened. But the debits that are huge/significant are what is troubling the banks. There was a N300 billion that happened about two weeks ago. and then yesterday that was this N459.7 billion that was also debited,” the banker added.