Naira hits 500/dollar, faces further decline

The local currency had been stable against the greenback for about three weeks.

The Nigerian currency, however, remained stable at the Bureau De Change segment of the market exchanging at N399/dollar, while the pound sterling and euro closed at N617 and N527, respectively, the News Agency of Nigeria reported.

The naira also remained stable at the interbank window exchanging at N305.25 to a dollar. Traders at the market said that the scarcity of the greenback was far from being over.

NAN reports that in spite of the weekly sale of forex to BDCs by the apex bank, the naira could not resist the temptation to fall. The parallel market, which was declared illegal by the BDCs, no longer responds to rising foreign exchange reserves, depreciating even as the external reserves appreciate.

The forex exchange reserves have gained more than $2bn in 2017, rising to $28.2bn on February 2. Economic and financial experts are divided over the outlook for the naira this year. Experts told our correspondent on Sunday that the local currency might depreciate further in coming weeks as scarcity of the greenback continued to escalate.

Meanwhile, the CBN sold about N400bn of Treasury bills on Friday, lifting the interbank lending rate up to 12 per cent. The CBN sold N82bn in 181-day Treasury bills at 18 per cent and N309bn at 18.6 per cent, mopping up liquidity from the money market and pushing up the cost of borrowing among commercial banks, Reuters reported, quoting traders.

“We have some major placers quoting about 20 per cent for overnight placement, but most takers are not willing to borrow at that rate,” one dealer said, adding that the rate eventually settled around 12 per cent on Friday.

The markets opened on Thursday with a surplus liquidity of about N467bn due to an injection of matured Treasury bills until the Central Bank of Nigeria later debited banks for the purchases of N302.4bn in primary market Treasury bills.

Source: Punch