Naira drops to N506/$ in parallel market

The Nigerian currency, Naira at the weekend depreciated further to close at 506 per US dollar on the parallel market, this indicates a total drop of six points compared to N500 that it exchanged in the previous day, foreign exchange traders have said.

The local currency has hovered near the N500 level for more than two weeks and, with demand for dollars swelling, crossed the threshold as the unapproved retail market opened on Friday.

Although, the naira has been trading at 498 for over three weeks, but recorded its further depreciation at the mid-week, shedding two points to close at N500 at the unofficial forex market.

The naira however remained stable at N305.25 to the dollar at 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 N506 to the dollar but appreciated while 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.