Naira trades at N334.50 per dollar

A day after the Central Bank of Nigeria hiked interest rates to try to lure foreign investors back into local assets, the Naira weakened to an all-time low of N334.50 against the dollar on the interbank market on Wednesday,

The Naira fell 5.8 percent on Wednesday from its opening rate, and $10 million was traded at the new record low.

Traders said investors were pushing the currency lower to test the limit of how far it can fall, given a spread of almost 12 percent between the official and black market naira rates.

“If we have more people trying to buy the naira then it should strengthen. I think we will keep seeing the trickles ... I don’t think we will see large inflows until the fundamentals of the economy improves,” one trader told Reuters.

The CBN had on Tuesday raised its benchmark interest rate by 200 basis points to 14 per cent, and maintained its existing cash reserve ratios for commercial banks in a bid to stabilise the Naira.

The Naira fell to 378 against the dollar at the parallel market on Monday, down from 375 on Friday as scarcity of the greenback continued to weigh on the local currency at both the interbank and black markets.

The dollar liquidity crisis at the interbank market has led to a continued pressure on the naira, causing consistent drops on the value of the naira at both the interbank and parallel markets.