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Naira drops to 223 as dollar demand grows

By on September 9, 2015

The naira weakened by 1.13 per cent against the dollar at the parallel market on Monday amid rising demand for hard currencies.

The local currency fell to 223 to the dollar at the parallel market, down from 220.50 to the dollar it recorded on Friday.

“The market is experiencing strong demand for the dollar from some individuals and businesses stocking for school resumption,” one trader said.

The naira had traded as low as 240 to the dollar after the Central Bank of Nigeria listed some 41 items that could not be imported at the official exchange rate.

It strengthened after the CBN increased the supply of dollars to Bureaux de Change operators, where importers were buying their dollars.

“The demand for the dollar is increasing while some customers are willing to buy at whatever rate they can get,” the President, Association of Bureau de Change Operators, Aminu Gwadabe, said.

The naira, which traded at 198.50 to the dollar on the interbank market earlier on Monday, closed at the 197 to a dollar peg rate set by the central bank.

Last Monday, the naira dropped by 2.3 per cent to 218 against the dollar at the parallel market. Forex traders linked the development to huge demand for the dollar by importers, politicians and investors.

Prior to this, the naira had hovered between 208-210 against the dollar after the central bank increased dollar sales to the BDCs in a bid to narrow the margin between parallel and interbank market rates.

Some forex dealers said a number of people were buying up dollars to pay school fees and other commitments abroad, fuelling a surge in demand at the parallel market.

Gwadabe had observed that rumours of further depreciation of the naira and likely stoppage of the CBN window to the BDCs were also creating high speculation and artificial scarcity in the forex markets.

 

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