Naira eases as FX uncertainty spurs dollar buying

Naira eased 1.1 per cent on the parallel market on Tuesday, as customers trying to hedge against likely currency depreciation when the Central Bank of Nigeria (CBN) clarifies its new forex policy, snapped up every available dollar from retail outlets.

The naira was quoted at 361 to the dollar on the parallel market, lower than 357 on Monday, driven by dollar scarcity, traders say.

“Dollar demand has increased due to uncertainty around central bank’s FX policy,” Aminu Gwadabe, head of Nigeria’s bureaux de change association, told Reuters.

CBN has said it would abandon its naira peg to the dollar and introduce a flexible currency regime. It has not said how this would work, though, which has unsettled investors worried about getting caught in the middle of devaluation.

Most firms and individuals that normally sell dollars to retail currency dealers are holding on to cash, Gwadabe told Reuters.