Naira dips to N351/$1 at parallel market

The naira has again dipped to 351 to the United States dollar at the parallel market and slightly to 282 at the new interbank market on Monday.

Following the floating of the naira and the adoption of a single structure through the interbank/autonomous window, the currency closed last week at 281 to the greenback at the official market.

The Central Bank of Nigeria, which has been intervening in the interbank market since it abandoned its peg of N197-199 to the dollar, asked for bid-offer quotes from currency traders on Monday as it sold dollars at the interbank market to boost liquidity, Reuters quoted traders to have said.

After abandoning the naira’s 16-month old exchange rate peg a week ago, the central bank sold dollars at an auction to clear a backlog of demand and keep markets active.

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It sold an undisclosed amount of dollars on Monday. However, the interbank market traded a total volume of $32m just before the market closed, which traders attributed to the central bank’s intervention.

The interbank market opened at 8am with no activity for more than three hours.

“Liquidity is still relatively thin,” one trader said, adding that clients were waiting to see where the naira settled eventually before they would begin to participate in the market.

Currency traders on Monday said they had tightened the differential between bids and offers to N0.5 from one naira set when the currency was floated last week to try to boost trading and attract liquidity.

Nigeria’s interbank market has traded for six days after the central bank forex reforms. Traders are expecting substantial currency flows from oil companies and exporters to start to trickle in from this week, they said.