( Reply) (Down)
The naira has continued
its abysmal run as it
has dropped against the
United States dollar to
499 on Tuesday, from
498 on Monday.
According to Reuters,
this is as a result of the
lingering scarcity of the
greenback in the
market. The local
currency had hit 500/
dollar on Friday, from
498/dollar it had
recorded last Thursday.
This came about one
week after the naira
touched 500/dollar
briefly and reserved
back to 498/dollar. The
local currency had been
stable against the
greenback for about
three weeks. During the
early hours trading on
Monday, the naira
traded flat at 500/dollar
on the black market
before closing at 498/
The external reserves
rose to one-year high at
$28.2bn on February 2,
the Central Bank of
Nigeria data showed on
Monday. On the official
market, it was at
305.25/dollar, where it
has been trading since
last August. The CBN
had last week sold $
660m in three and five-
month currency
forwards at an auction
aimed at clearing a
backlog of dollar
But traders said it was
not enough to satisfy
the market.
“Despite rising FX
reserves, it’s the
amount of the FX that
is supplied that
matters. The parallel
market, by its nature, is
particularly sensitive to
imbalances, and has a
tendency to
overshoot,” Reuters
reported, quoting the
Head of Africa Research
at Standard Chartered
Bank, Razia Khan.
“Supply of FX matters
more than any other
factor,” she added.
Traders said the CBN
had been selling dollars
on the official market
to support the naira,
but dollar shortages
were causing the local
currency to weaken on
the black market.
The naira lost a third of
its official value against
the dollar in 2016 after
the CBN scrapped its
peg for the currency,
allowing the naira to
float on the interbank
market, in a bid to
alleviate dollar
On the Bureau de
Change segment, the
naira closed at N399/
dollar, while the pound
sterling and euro closed
at N617 and N527,
respectively. Traders
said that the scarcity of
the greenback was far
from being over. The
forex exchange
reserves have gained
more than $2bn in 2017,
rising from $25.8bn on
December 30, 2016 to $
28.2bn on February 2,
Economic and financial
experts are divided over
the outlook for the
naira this year.
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