Naira Rises Against Dollar

The naira, which had fallen sharply in the parallel market, staged a major recovery thursday, as it appreciated to a band of N225 to N230 to a dollar, compared to N240 to the dollar at which it sold in the last few weeks.

Forex dealers attributed the naira’s gain to excess supply of the greenback in the market, even as it looked like a lot of speculators would lose their shirts.

It was gathered from a reliable source that commercial banks that presently have dollars in excess of $1 billion in their vaults have started taking desperate measures to mitigate currency risk.

According to the source, as a result of the development, banks have been rejecting dollar deposits into domiciliary accounts, but customers are allowed to withdraw cash from their accounts.

“The reason the banks have too much cash is due to speculation and money laundering. A lot of people have been speculating against the naira and amassed so much cash. Then there are those who have been amassing dollars obtained illicitly and want to launder the money,

“So bank vaults are awash with dollars, largely driven by speculation and money laundering. The banks made it very clear that they want to get rid of the dollars in the system, so if you want to withdraw you can, but you cannot pay in dollars into your domiciliary account,” the source explained.

Confirming the development, an official of the Central Bank of Nigeria (CBN) said the banks even offered the dollars to the central bank and sought its assistance to help them to wire the funds overseas, which the CBN rejected.

Following the rejection, the banks were left with no option than to stop accepting dollar deposits from customers, hence the sharp depreciation of the dollar to the naira in the informal forex market.

Naira Drops To 241 Against A Dollar

The naira has hit a new low against the dollar on the black market. It now sell for N241 to a dollar on Monday, as importers banned from accessing hard currency at the official interbank market by the central bank three weeks ago scramble for hard currency in the unofficial market, a Nigerian currency trader said.

Low oil prices have further battered the currency and government finances.

Similarly, Nigerian stocks fell to a more than three-month low and the naira hit another record low on the parallel market on Monday, as central bank restrictions fed unofficial trade in dollars, traders said.

The local bourse, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, dropped for the ninth consecutive day as investors shed banking, consumer and oil shares.

Sub-Saharan Africa’s second biggest stock index closed down 0.32 percent on Monday, 11.5 percent lower than its 2015 peak, hit on April 2 having soared 12.2 percent in the two sessions after Muhammadu Buhari won a closely-fought presidential election.

The index of Nigeria’s top 10 consumer goods stocks declined 1.15 percent on Monday, weighing on the all-share index. The top decliners were Flour Mills , Honeywell Flour Mills and Union Bank , all down more than 4.9 percent each.

The central bank has said it would not be focusing on the thinly-traded parallel market when determining the exchange rate, adding that people preferred to use the unofficial market for undocumented transactions.


PMnews

Naira Drops To 235 Against Dollar($)

The naira fell further to a new record low of 235 to the dollar at the parallel market on Thursday, as dollar shortages persisted, foreign exchange dealers said.

The President, Association of Bureau De Change Operators, Aminu Gwadabe, said people were holding dollars to protect themselves against further naira weakness.


The naira, however, ended at 196.95 on the official interbank market on Thursday.

The local currency had fallen to 233.5 earlier in the week.

The naira has been on the ropes on the parallel market since the Central Bank of Nigeria introduced new measures two weeks ago restricting importers from sourcing the greenback from the interbank market, shifting dollar demand to the black market.

The naira, which was selling at 218 before the new forex rule, had been dropping steadily against the dollar since then.

Analysts had predicted that the naira might fall to 250 against the dollar if the current demand pressure persisted.

The Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, had on Wednesday said the central bank’s forex rules were yielding results as the external reserves had started to recover gradually.