The Naira on Friday weakened at the parallel market as it traded for N454 to $1 due to the high demand for the Dollar by foreign investors and business owners, whose dollar payment obligations have accumulated amid a shortage of the currency.
Meanwhile, the Naira is seen ranging on the official and the currency spot markets, bank currency traders said, as buyers resist weakening of the Naira since the majority of dollar supply is from the Central Bank of Nigeria.
Lately, at the forward market, the naira recently depreciated exchanging at an all-time high against the dollar, with the 5 years non-deliverable forwards falling to N570/$1 from N413/$1. Meanwhile, the apex bank insisted that it has enough dollars to meet demand.
Meanwhile, inflationary pressure on the Naira might strengthen in the short term as the total currency in circulation enlarged from N2.29 trillion at the end of March to N2.3 trillion at 30th April, its highest in three months.
The total circulated currency in the country had dipped by N61 billion from N2.24 trillion at the end of January to N2.18 trillion at the same period in February.
Between the end of October 2019 and last December, the figure had escalated from N2.05 trillion to N2.44 trillion, reflecting a 19% rate of increase in just a quarter.
“Currency-in-circulation at end-November 2019 rose by 9.9 per cent to N2.2tn, in contrast to the decline of 0.4 per cent at end of third quarter 2019.
“The development, relative to the level in the preceding quarter reflected mainly the increase in its currency outside banks component and seasonal factors,” a statement from the CBN stated.
By November 2019, total deposits at the central bank were valued at N14.35 trillion, having risen by 3.6 per cent over the figure reported as of third quarter 2019.
The CBN linked the growth to the expansion in the size of the fund mopped up from commercial banks and the Nigerian government, which rose by 3.1 per cent and 14.3 per cent in that order.
The Nigerian government accounted for 47.4 per cent, the private sector 35.9 per cent and banks 16.7 per cent of the total deposits at the apex bank.
Reserved money grew 5 per cent to N7.35 trillion at November ending relative to a 13.5 per cent plunge posted at third quarter 2019, the CBN stated.