Naira drops to N500/$ at parallel market

The naira on Wednesday depreciated again to 500 per dollar.  At the close of the market, the value of the local currency which had appreciated to N498 to the dollar on Tuesday exchanged between 499 or 500 to a dollar at the parallel market.

The naira, however, remained stable at N305.25 to the dollar on the interbank market, on the website of the Association of Bureau de Change Operators; the naira was quoted at N315.38 to the dollar.

But traders said that shortage of dollar has continued to mount more pressure on the Naira at the parallel market.

Last Friday, the naira exchanged for N500 to the dollar but appreciated by N2 on Monday.

Also, other foreign currencies such as pound sterling and euro were traded at N612 and N530 respectively.

Demand for the greenback grew and the Central Bank of Nigeria rationed dollar supply, having sold $660 million in 3- and 5- month currency forwards at an auction aimed at clearing a backlog of dollar demand. Traders, however, said the dollar sale was not enough to satisfy the market.

Traders said while the apex bank has been selling dollars on the official market to support the naira, dollar shortages were causing the naira to weaken on the black market.

Head of Africa Research at Standard Chartered Bank, Razia Khan said, “Despite rising foreign exchange reserves, it is the amount of forex that is supplied that matters.”