Naira suffers setback, drops N455/$ at parallel market

By Odunewu Segun

Nigeria’s local currency, the Naira on Wednesday, March 1, took a plunge at the parallel segment of the foreign exchange market, dropping to 455 against the American dollar, National Daily reports.

The local currency crawled back at the start of the new month after gaining a whopping 8.1 per cent to strengthen to 425 per dollar at the close of trading on the last day of the month, February 28.

The naira at the black market on Tuesday traded for N560 against the British Pound Sterling, while it exchanged for the rate of N460 against the European single currency, Euro.

Meanwhile at the official interbank or spot FX segment of the currency market, the naira traded at N305 against the greenback. Against the sterling, it exchanged for N378 and traded at the rate of N324 against the Euro.

The Naira had caught a major break a week ago gaining a staggering 40 points to trade at N460 per after wallowing in the range of N500-N520.

Recall that barely 24 hours after it unveiled a new foreign exchange policy aimed at easing the difficulties encountered by Nigerians in obtaining funds for Foreign Exchange transactions, the Central Bank of Nigeria (CBN) on February 21 carried out wholesale interventions in the interbank forex market by providing a total sum of $370,810,810.79 to 23 banks to meet the visible and invisible requests of customers.

The CBN, on February 27 also released additional $180 million to the forex market to further ease business transactions in the country. The intervention was done in two phases – an $80 million offer for Personal Travel Allowance (PTA), school fees and medicals at the inter-bank market and $100 million Wholesale Forwards Market sell, which by the new policy, is reduced to maximum of 60-day tenor.

The apex bank had pumped $500 million into the market, which impacted positively on the value of the naira against major currencies of the world, particularly the United States dollar, which fell against the naira from N520 to N466 to $1.

The efforts by the CBN in making available large amount of forex to the market has led to the appreciation of the naira by over N85 in less than one week.

The CBN had maintained that much of the dollar demand had been a bubble created by speculators and hoarders of the greenback. On a radio programme yesterday, the apex bank had warned market players and keepers of dollars to make hay and sell their holdings to avoid heavy losses.

Confirming the development, the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, said the banking watchdog’s intermediation in the forex market was the first wholesale intervention aimed at easing the pressure of access to forex by Nigerians who intend to meet obligations that fall under visible and invisible needs categories.