Trading of the Nigerian currency – the Naira further weakened and sold at 475 to the United States dollar on Monday in the parallel market amid a rise in demand for the greenback. The local currency, which has come under pressure in recent days, fell to 470 per dollar on Friday from 468 on Thursday when it traded at 462-463 at the unofficial market at the start of this month.
A peep into the Investors’ and Exporters’ forex window showed that the naira closed at 386 to a dollar on Monday, compared to 385.50 at which it opened, according to data from FMDQ Group. The CBN has kept the official exchange rate at N379/$1 since August, when the naira was devalued for the second time in the current year 2020 from 360 per dollar. It was first devalued to 360 in March from 306.
The MD/CEO, Financial Derivatives Company Limited, Mr Bismarck Rewane, had said earlier this month that the naira would weaken in the parallel market and likely depreciate to 470-475 against the dollar in November and December.
He said with oil prices still under pressure again, the supply of forex into the country would be further limited. He said the resumption in international flights, trading and manufacturing activities will heighten forex demand pressures.
The Deputy Governor, Corporate Services Directorate, CBN Mr Edward Adamu, said the demand pressure in the forex market had remained elevated in the face of declining accretion to external reserves and declining private inflow. He added that legitimate sources of forex demand, speculation and other frivolous demands had contributed to sustaining pressure on the naira exchange rate. Bloomberg reported last Friday that the naira had lost all ground it gained after the regulator started weekly interventions, signaling the continuous existence of pent-up demand for the greenback.
The CBN resumed sale to licensed Bureau de Change operators in September after the Federal Government opened up international travel following the lifting of COVID-19 restrictions.