Naira dips to 378/dollar as liquidity crisis worsens

The naira fell to 378 against the dollar at the parallel market on Monday, down from 375 on Friday as scarcity of the greenback continued to weigh on the local currency at both the interbank and black markets.

Similarly, at the interbank market on Monday, the naira slipped by 2.5 per cent to a new closing low of 310 per dollar.

According to traders, the continued depreciation of the naira is as a result of dollar liquidity crisis at the interbank market which has led to a continued pressure on the naira.

Foreign exchange dealers said the local currency fell after the Central Bank of Nigeria failed to lure in local investors or foreign players to the interbank market, adding that trading at the interbank market dried up on Monday in anticipation of an interest rate hike by the CBN’s Monetary Policy Committee on Tuesday.

The naira opened at a record low of 302.10 on Monday and traded a total of just $8.64m by the close, far less than $100.54mn on Friday, when the CBN spurred the market by selling some of its dollars.

ALSO SEE: Naira strengthens against dollar at parallel market

The CBN had hoped that scrapping the dollar peg and letting the currency fall by a third would help attract investment and erase the need for a black market, where the naira trades another 17 per cent weaker against the dollar.

But some foreign players have stayed out of the market, according to traders.

The MPC is due to make some policy announcements at the end of its two-day bi-monthly meeting on Tuesday.

Analysts expect the MPC to raise interest rates, which should make the currency more attractive to foreign investors.

The CBN ditched its 16-month-old peg of N197/dollar in June to allow the naira to trade freely and lure back foreign investors who fled both the equities and bond markets in the wake of the plunge in crude prices.