The Naira on Friday, September 9, dropped to N424 against the American Dollar at the parallel market after trading between N423/$1 and N425/$1 from Monday to Thursday.
In spite of the re-admittance of the suspended commercial banks into the interbank forex market, the naira/dollar exchange rate remained pressured during the week.
Also, activity level at the interbank market dwindled compared to the preceding week as the naira/dollar spot rate traded at a tight band of N314.20/$1 and N314.92/$1 between Monday and midweek, before appreciating to N308/$1 last Thursday. The naira closed the week at N310.64/$1 on the interbank forex market.
In the futures market, despite the AUG 16 2017 Futures contract trading at N241.00/US$1.00, the 1-Year forwards rate hovered between N352.00/US$1.00 and N354.70/US$1.00 during the week (except for Tuesday when it appreciated to N314.00/US$1.00), implying a weaker expectation for future price of the naira.
The central bank intervened with dollar supply to the interbank market on most trading days of the week as autonomous suppliers remain scarce.
However, with the protracted instability in the money market, its is clear that the anticipated convergence of exchange rates at the interbank and parallel markets currently remains a mirage even as the liquidity crisis in the currency market lingers.
