Finance

Naira on a free fall as it crashes to nearly 500/Dollar in open market

The Nigerian naira fell close to 500 against the dollar on the unapproved open retail market due to dollar shortages on Friday as retail currency operators set their quotes for dollar purchases at 399 for next week, traders said.

Bureau de change operators said the central bank had approved 399 naira for retail trades this week, their association said in an internal memo seen by Reuters.

The government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate – currently at 305 to the dollar – and the unapproved open retail market – which hit 497 on Friday.

Traders said FX bureaus were yet to receive dollars from international money transfer agents this year worsening forex liquidity on the market.

However, money markets were awash with naira liquidity on Friday pushing overnight lending rates 2.5 percentage point down to 7 percent.

Aminu Gwadabe, president of the Bureau de Change association told Reuters, he expected dollar supplies to resume this week.

On Tuesday the operators set their first ever reference exchange rate for the naira at 399 per dollar, to try to improve liquidity and help rebuild investors’ confidence ahead of a meeting with the central bank.

Central Bank Governor Godwin Emefiele told retail operators in a meeting on Thursday that he was looking at ways to boost liquidity to eliminate the spread at the parallel market and would not devalue the naira again.

The naira lost a third of its official value against the greenback in 2016 after the bank scrapped a currency peg in a bid to alleviate dollar shortages. On the unapproved open market, the naira is worth about 40 percent less than the official rate.

Source: Reuters

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