The naira lost the momentum it had gained the previous week and plunged against the dollar on Monday, averaging 1,030/$ on the parallel market.
Comparing this to the N950 it concluded the week at last Friday, the local currency has lost N80, or 8.42 percent.
Additionally, since the Central Bank of Nigeria started to clear some of its FX backlog last week, this is the first time that the value of the naira has declined.
The PUNCH was informed by currency dealers, also referred to as bureaux de change operators, that the value of the naira was fluctuating between N990 and N1,030/$.
“The dollar is N995 if you want to sell,” a trader going by the name Awolu stated. It is N1,020 if you would want to purchase from me. “If you want to sell, the dollar is N960,” said Kadri, another trader. It costs N990 if you wish to purchase.
As a result of consumers who purchased the dollar at a higher price fighting its decline after the Central Bank of Nigeria’s move last week, the dollar has appreciated vs the naira, according to Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria.
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The peak bank has started paying outstanding matured foreign exchange forwards owed to several banks, according to a report published in The PUNCH last week.
This was done in an effort to increase foreign exchange market liquidity after weeks in which the naira dropped to all-time lows. The quantity of past-due forward payments, as stated by Finance Minister Wale Edun, was around $6.7 billion.
The naira gained almost N220 as a result of this action, as it had closed the week at N950/dollar on the parallel market. It appears that the naira has suddenly lost its impetus. Gwadabe told The PUNCH that the dollar’s closing price was N1,015 and N1,020/$ in the afternoon. At N1,030/$, it closed.
He highlighted, “Speculators are always looking at elements of sustainability. Once they sense that it (the injection) is not continuous, they begin to react. They begin to react. It is the reaction of the market we are witnessing. Also, there is resistance. There are people that bought at a higher price that this does not favour. People are not willing to take further losses.
“The only way we can continue to achieve the rate is by continuing to send confidence to the market. Tell the market that another window is opening, and boost liquidity. The parallel market is where the retail end is. And as of now, there is no information as to how liquidity will come into that sector. All we have is that BDCs will be included to advance the official foreign exchange market. We cannot wait in the FX market.”
Also, the naira declined by 3.6 per cent at the official market to close at N809.02 to the dollar on Monday from N780.23/$ on Friday according to details on FMDQ OTC Securities Exchange.