Naira's slide continues, trades at N400 per dollar in the black market - EazyFeeds

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Monday 8 August 2016

Naira's slide continues, trades at N400 per dollar in the black market

Nigeria's currency, the Naira traded at N400 to the dollar on Friday and Saturday in the black market as supply shortage persisted.

Traders at bureaux de change said the currency has fallen to its lowest since the central bank floated the currency in June.

However on the official interbank market, the Naira ended at 311 per dollar, 0.3 percent weaker, after trades worth $12.63 million.

The currency has dropped steadily on the black market this week after opening at 381 on Monday. Traders say dollar demand has been high from individuals travelling abroad for their summer holidays.

The central bank has told international money transfer operators to pay dollar proceeds from customer transfers into local commercial banks in Naira, while selling the dollars themselves to bureaux de change outlets.

The bank hopes the move will help narrow the gulf between the official and black market rates and boost dollar liquidity, traders say.

It had hoped that the need for a black market would be erased by scrapping the dollar peg and thereby attracting foreign investment.

Reuters reported that dollar liquidity remains thin and has curbed interbank activity, despite the central bank hiking interest rates last week and mopping up Naira liquidity to shore up debt yields.

Some past suppliers of dollars, including oil firms, are now selling some of their hard currency directly to petrol importers under an arrangement with the government, traders say.

Other foreign players have stayed out of the market, traders say, after exiting the equities and bond markets in the wake of the plunge in crude prices in mid-2014, until Africa's biggest economy show signs of stabilising.

Before the central bank pegged the naira at 197 to the dollar in Feb 2015, the interbank market had traded daily volumes of over $100 million.

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