Naira heads south at the autonomous and parallel market

Nigeria’s currency, Naira extended its losses against the dollar on Friday amid a jump in demand for dollars by oil importers and speculation of central bank moves to make the exchange rate more flexible. 

The local currency slipped to 345 to the dollar on the parallel market in early trade, down 1.2 percent compared with the previous day’s closed.

NAIRA DOLLAR POUND EURO

(NGN)           (USD)  (GBP)  (EUR)

BUY / SELL BUY / SELL BUY / SELL

13/05/16: 340/350 463/469 364/370

12/05/16: 330/335 460/465 362/366

11/05/16: 320/323 456/460 360/364

10/05/16: 320/323 457/461 360/364

09/05/16: 320/322 460/465 360/365

Observers told Elombah.com speculators have moved rapidly into the parallel market and have sparked off a bidding war on the Naira as they expect an imminent devaluation of the Naira before the end first half of 2016.   

“More speculators are taking a position in the market, causing dollar scarcity and fall in the value of the local currency,” said Aminu Gwadabe, head of the bureaux de change operators association. 

This comes as Oil marketers were given the go-ahead to source foreign exchange (forex) to import petrol into the country at an autonomous exchange rate of N298 to the dollar.

According to the Petroleum Products Pricing Regulatory Agency (PPPRA), which released a revised pricing template for petrol on Wednesday night, the forex rate was pegged at N298 to the dollar to limit the challenges associated with sourcing and accessing forex for the importation of petrol by oil marketers.

Nigerians Central Bank Of Nigeria, CBN, has fought bravely defending the Naira but the rapid depletion of the Foreign reserve in April and early May has been a major setback in the forex policy.

“Speculators are now fully in control of the parallel market. Expect to see wide spreads in daily quotes for the rest of May”, Forex observers told Elombah.com.

On Wednesday, the Nigerian government said fuel importers were allowed from how on to get dollars from the parallel market to help ease acute shortages – likely to result in increased demand for dollars, and more pressure on the naira, as importers increased their orders.

On the official interbank market, the naira is quoted at 197.50 to the dollar, near the official peg rate of 197 to the dollar.

However, currency traders said they are hopeful the central bank will soon review its rigid exchange policy.

“Banks are already calling the central bank to get clarity on the next move concerning the naira exchange rate, our expectations is that the bank will over the next few days provide some form of clarification on the next step on the naira,” a senior banker who don’t want to be named told Reuters.

“Hopefully, we shall soon have a more flexible exchange rate in the next couple of days based on the pronouncement of the government in recent time,” a currency dealer said.

The central bank banned dollar sales to retail bureaux de change in January and reduced supply at its official interbank forex market in an effort to conserve reserves, now at their lowest level.

For Diaspora Digital Media Updates click on Whatsapp, or Telegram. For eyewitness accounts/ reports/ articles, write to: citizenreports@diasporadigitalmedia.com. Follow us on X (Fomerly Twitter) or Facebook