The naira, on Thursday, August 18, fell to a new all-time low of N365.25 to the dollar at the interbank foreign exchange market in a single interbank market trade of $1 million, before the naira finally stabilised at N318.00 to the dollar. But on the parallel market, the naira stood at N395 to the dollar.
The local currency fell to a record low and forwards rose, suggesting traders expect further depreciation, as the country struggled amid a dearth of dollars. The naira fell 5.9 per cent before paring losses to N330.63 to the greenback.
Three-month non-deliverable forward contracts soared by 4.6 per cent to N366 versus the greenback, heading for a record close. Contracts maturing in a year climbed 2.7 percent to N400. A total of $13 million had been traded during the day.
Nigeria’s currency has slumped 37 per cent since the central bank ended a 16-month peg of N197-N199 per dollar on June 20. The capital controls needed to defend the fix sent foreign investors fleeing and took the country to the brink of recession.
Nigeria’s currency has slumped 38 percent since the central bank ended a 16-month peg of N197- 199 per dollar on June 20.
“There’s still a lot of demand for dollars,” Switzerland-based brokerage Continental Capital Partners SA, Craig Thompson, told Bloomberg yesterday
“The central bank has been supplying them. They sold some at N309 yesterday to keep the rate down. They’ve been selling dollars most days to keep it going above N320 and have done their best to try and keep it closing around N310. Managing the exchange rate is difficult because there’s pent-up demand.”
The benchmark equity index fell 0.1 percent, its first drop in four days, to 27,402.99. It’s down 8.9 percent in the past year. Yields on Nigeria’s $500 million Eurobond due in July 2023 were little changed at 6.38 percent.
Local banks are unable to meet much of the demand for dollars, forcing their customers on to the black market. There, the naira trades at 394 per dollar, around 11 percent weaker than the official rate.
