Naira strengthens to N345/$1 at parallel market

The Nigerian currency, the naira strengthened to N345 per United States dollar at the parallel market on Tuesday, as against the exchange rate of N351 that it was sold on Monday when the market opened for the second week of the new foreign exchange regime operations.

The price of the naira at the parallel market yesterday indicated that the local currency gained a total point of N6 at the parallel market when the market closed for the day according to traders.

The forex traders that spoke with our correspondent said that they bought the Greenberg at the rate of N340, while selling at N345. The pound sterling which has continued to deprecate sold at N455 and was bought at the rate of N450 at the parallel market.

However, the Central Bank of Nigeria (CBN) sold an undisclosed amount of hard currency on the interbank market to ease dollar shortages and provide importers the dollars to pay for the products they bring into the country, traders said on Tuesday.

The naira ended at N282.50, slightly weaker than the 281 naira to the dollar it first traded at on Tuesday, more than three hours after market opened at about 8: am on Tuesday morning.

The Daily Times notes that CBN has been selling dollars on the interbank market since it ended its 16 month-old currency peg last week, and it sold again on Tuesday, asking currency traders for bid-offer quotes.

But we gathered that a total of $51 million traded on the interbank market just before the market closed, which traders attributed to apex lender’s participation.

The old currency peg had set a rate of N197 naira to the dollar, which over-valued the naira and led to a shortage of dollars that choked off growth in the economy. The shortage was exacerbated by plunging prices for oil, Nigeria’s biggest export and its main source of hard currency.

Meanwhile, the CBN on Monday introduced an Over-The-Counter (OTC) futures market for the currency, to help manage dollar demand, quoting the naira firmer at N279 to the dollar in a month’s time and at N210 naira by April next year.

In the non-deliverable forwards market, the naira rose against the dollar on Tuesday, with the one-month contract NGN1NDFOR= quoting the currency as firm as N283, after hitting N296 a week ago.

On his own part, President Muhammadu Buhari on Monday said he did not see any benefit that the country could derive from the devaluation of the naira. This is despite the implementation of the flexible exchange rate policy, which financial experts have referred to as a technical devaluation of the nation’s currency.

Following the floating of the naira and the adoption of a single structure through the interbank/autonomous window, the currency closed last week at N281 to the greenback at the official market.

The President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said on phone that the naira dropped to N351 at the parallel market on Monday from N346 and N348 due to persistent liquidity issue.

He said that lack of liquidity in both the interbank and parallel markets is what is affecting the naira exchange rate to the dollar.

“Right now, the only thing that the market is scavenging for is the export proceeds. There is a liquidity crisis”, he pointed out.