Naira falls to 351/ dollar at black market

The naira fell to 351 to the United States dollar
at the parallel market and slightly to 282 at the
new interbank market on Monday.

Following the floating of the naira and the
adoption of a single structure through the
interbank/autonomous window, the currency
closed last week at 281 to the greenback at the
official market.

The President, Association of Bureau De Change
Operators of Nigeria, Alhaji Aminu Gwadabe, in
an interview with our correspondent, said the
naira dropped to 351 at the parallel market
from between 346 and 348 due to persistent
liquidity issue.

He said, “Lack of liquidity in both the interbank
and parallel markets is what is affecting the
naira exchange rate to the dollar.

“Right now, the only thing that the market is
scavenging for is the export proceeds. There is a
liquidity crisis.”

Asked if demands have shifted away from the
parallel market as a result of the new forex
policy, Gwadabe said, “How can demand shift
away from the parallel market when you have
about 41 items that cannot obtain forex from
the official market? You cannot completely kill
the black market, you can only formalise it.”

The Central Bank of Nigeria, which has been
intervening in the interbank market since it
abandoned its peg of N197-199 to the dollar,
asked for bid-offer quotes from currency
traders on Monday as it sold dollars at the
interbank market to boost liquidity, Reuters
quoted traders to have said.

After abandoning the naira’s 16-month old
exchange rate peg a week ago, the central bank
sold dollars at an auction to clear a backlog of
demand and keep markets active.

It sold an undisclosed amount of dollars on
Monday. However, the interbank market traded
a total volume of $32m just before the market
closed, which traders attributed to the central
bank’s intervention.
The interbank market opened at 8am with no
activity for more than three hours.

“Liquidity is still relatively thin,” one trader said,
adding that clients were waiting to see where
the naira settled eventually before they would
begin to participate in the market.

Currency traders on Monday said they had
tightened the differential between bids and
offers to N0.5 from one naira set when the
currency was floated last week to try to boost
trading and attract liquidity.

Prior to the old exchange rate peg, the currency
market traded on N0.5 spreads, they said.
Nigeria’s interbank market has traded for six
days after the central bank forex reforms.
Traders are expecting substantial currency flows
from oil companies and exporters to start to
trickle in from this week, they said.