Naira crash set to all time low of 350/ USD
The sharp and steady depreciation of
the Naira at the inter-bank foreign exchange market in the last one week has
forced the Central Bank of Nigeria, CBN, to intervene yesterday to stem the
slide. Naira-Dollar Naira-Dollar The apex bank was said to have offered about
USD5.0 million each to dealers amidst scarcity of foreign currency which had
persisted since last week Friday following the sudden withdrawal of CBN’s
interventionist resources. Dealers said the supply from the apex bank saved the
Naira from crashing to N350/ USD1 yesterday as the rate was already gone beyond
N330 as at mid day before the apex bank’s intervention which relieved the
pressure and forced the rate down to less than N310. But the intervention could
not save the Naira from further depreciation at the parallel market segment
where it traded for N380/ USD as against N375 it closed on Thursday, a
development which the dealers said was connected to a perceived pressure on
external reserves and CBN’s capacity to continue to be the only supplier in the
market. The local currency has been on a downward spiral since the CBN
eventually took away the currency price ceiling it had subtly placed after it
officially floated the currency mid last month. The depreciation in the Naira
is also mainly attributed to the lack of supply from CBN following reports that
the apex bank had reduced its forex allocations to sales in the interbank
market due to other pressing needs for the foreign exchange resources amidst
dwindling dollar revenue from oil sales. Before now, s upplies other than the
CBN had avoided the inter-bank forex market over complaints that the official
rates did not represent the true value of the Naira against the dollar, hence
they find their way to push their dollars to the parallel market segments.
According to some dealers international oil firms who are major independent
suppliers of forex are now selling part of their hard currency directly to
petrol importers under an arrangement with the government. They, however,
explained that they are still looking at what will be a comfortable exchange
rate for sellers to come back to the market and that is why the rates kept
going up in the past one week. Last week CBN governor, Godwin Emefiele, flew to
Britain and the United States to try to lure back investors into Nigeria’s
financial market after nearly one year they left due to CBN’s exchange rate control
policy. Vanguard learnt the trip was unsuccessful as the investors told the CBN
team that the market was not yet transparent enough adding that the external
reserves level was also uncomforting for them.
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