Fresh worries as naira slides to 1,478/$ in parallel market

The naira began the new week on a downward trend, depreciating by N23 to N1,478 per dollar at the official market on Monday.

The currency also dropped to N1,480 at the parallel market after the close of trading activities.

This represents 1.35 per cent or N20/$ depreciation against the US dollar when compared to the level of N1,460 exchanged on Friday.

The fall came despite that Nigeria’s external reserves marginal rise by 0.4 per cent week-on-week to settle at a four-week high of $32.4bn as of May 8, 2024.

Last week, Bloomberg reported the naira as the worst-performing currency over the last month, a reversal in its recent gains.

It attributed the decline to the local scarcity of the US currency, with financial experts anticipating a forex intervention in the market to improve liquidity.

Commenting, The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Muda Yusuf admitted that the apex bank might be forced to intervene in the FX market as a result of the fall.

He, however, mentioned that the government should focus its efforts on sustainable dollar liquidity to build the economy.

Yusuf said, “They may want to intervene but until our supply improves, in a sustainable manner, we are bound to have these issues.

“The current issue is because of portfolio investors who just withdrew their investments and we really can’t depend on those persons to improve our liquidity.

“We need something more sustainable and our best bet is in the oil and gas area. The idea of chasing the Bureau de Change or stopping foreign missions from charging in dollars cannot solve the problem. The real problem is to build an economy that can generate foreign exchange.”

At the close of the FX market on Monday, the naira fell flat by 1.55 per cent as the dollar was quoted at N1,478, weaker than the N1,455 it closed on Friday at the Nigerian Autonomous Foreign Exchange Market, according to the market summary released by FMDQ Securities Exchange Limited.

The intraday high closed at N1,515 on Monday, weaker than the N1,490 it closed on Friday. The intraday low closed at N1,301 per dollar as against N1,322 on Thursday.

Dollar supplied by willing buyers and willing sellers increased by 47 per cent to $217.64m on Monday from $113.78m recorded on Friday.

In the parallel market, traders at the popular Wuse Zone 4 market said the naira traded at N1,480 at the selling rate and N1,460 at the buying rate, leaving a profit of N20.

Malam Yahu, a trader also said operators were yet to receive allocations from the apex bank as part of its intervention strategies.

“The naira was N1,480 today. We bought at N1,460 or less depending on the bargaining power of the customer.

“We have not seen any intervention from the CBN and it looks like they gave out that information just to make people panic. They can’t also say it’s the operator that caused the new fall.

“The market fluctuation is bad and people are losing their capital,” he said.