Naira Drops To 493 As Dollar Demand Rises (Read)


The naira fell further against the United
States dollar at the parallel market on Friday
to 493, from 490 on Thursday as increased
dollar demand weighed on the market.
Forex traders said the local unit plummeted
following an increased demand for the dollar
and other hard currencies by parents seeking
to pay school fees of wards studying
overseas.
The naira had closed flat against the dollar at
the official interbank window and at the
parallel foreign exchange market last
Tuesday, the first official trading day of the
year.
It closed at 305 to a dollar at the official
window, the same rate it closed on the last
working day of 2016, while the local currency
closed at 490/dollar on the black market.
The naira had similarly closed at 490/dollar on
Friday, the last official trading day of 2016.
The local currency also closed flat at 490/
dollar last Wednesday and Thursday at the
parallel market, before recording loss on
Friday.
Economic and financial experts have
expressed divergent views over the outlook of
the naira this year.
The naira beat analysts’ expectation and
closed the year 2016 at 490 against the dollar
at the parallel market.
Due to the persistent pressure on the naira,
currency and financial analysts had predicted
that the local currency would hit 500/dollar on
or before the new year.
The naira has been under severe and
continuous pressure as the scarcity of the US
currency continues to create ripples in the
financial markets and economy.
The CBN had about two weeks ago sold about
$1bn on the forward market to clear a
backlog of dollar obligations in selected
sectors.
Traders said the CBN told banks to prioritise
airlines, manufacturing firms, petroleum
products importers and agriculture, the
sectors worst hit by the dollar shortage, in the
auction.
The CBN has struggled to support the naira
as the country’s external reserves continue to
fall.

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