Thursday, 29 September 2016

Naira slumps to a new low to dollar

The recession in Nigeria is becoming scary.
In a twinkle of an eye the naira has continued to soar high against the dollar putting many people in hardship, businesses closing and companies folding up.

The rate as of Wednesday was 470 to the dollar on the parallel market. This is the  biggest daily decline since the Central Bank of Nigeria adopted a flexible foreign exchange regime.

The local currency stood at 452 to the dollar at the close of trading on Tuesday, down from 445 against the greenback on Monday.

The naira closed flat at 312.99 against the dollar at the interbank market on Wednesday, according to data from FMDQ OTC Securities Exchange.

Traders and analysts said dollar liquidity remained a major challenge in the market amid surging demand pressure on the greenback by parents paying schools fees of their children studying overseas as well as travellers.

The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, told Punch correspondent, “The rate is N472 to the dollar as we await the kick-off of the distribution of dollars to the BDCs by Travelex on Friday.

Noting that the naira had been relatively stable in the official market, Ezun an Eco bank analyst said. “But the parallel market will always respond to liquidity, which is not available. The parallel market will help you to assess the level of liquidity in the market.

“So, if liquidity is high, we will see it in the parallel market. But as we speak today, there is no liquidity in the market, and that is why we keep seeing that volatility in the parallel market.”

Ezun said the naira might hit 500 against the dollar in the coming days.

He explained, “The only way out is when there is dollar inflow into the market, and this is one of the reasons the CBN says it is not willing to cut the Monetary Policy Rate now. The idea is that why you are still trying to woo foreign investors into your fixed-income market, you should continue to be able to assure them of returns on their investment.

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