Naira in free fall, drops by 9.5% at interbank market

The Naira hit a record low of 330 per dollar at the regular interbank trading on Friday, falling 9.5 per cent as traders tested lower levels seeking to attract liquidity in the absence of central bank interventions.

However, the Naira fell to 298.50 per dollar on thin volumes as market opened and extended losses to trade a total volume of $26.97 million. The Naira on Thursday crossed 300 for the first time and hit 330.50 in off-market trades.

Traders were expecting the central bank to intervene to ease dollar shortages, which did not materialise. The bank has not intervened for most of this week, they said. Instead it was mopping up Naira liquidity to support the currency.

"We are looking at what will be a comfortable rate for sellers to come back to the market," one trader said, referring to foreign players. Most banks are quoting around 300 levels but liquidity is still thin. The central bank hasn't participated this week," he said.

Last week the central bank governor flew to Britain and the United States to try to lure back investors. However, some investors said the naira's devaluation was not strong enough to erase the need for the parallel market, where those who still have dollars to sell go.