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Fx market traps naira to 480 per dollar

Fx market traps naira to 480 per dollar



The Nigeria Currency, Naira has on Thursday pitched against the price of Dollar to a new record low of N480 per Dollar at against its previous price of N472 per dollar as at Wednesday.

A Dealer who sees the possibility in the soon fall of naira said in his words “dollar is very scarce in the market, because so many do not know the extent of its fall, in the near term. People tend to hold on to their hard currencies, in other to watch the direction of the market”.

Economic and financial analysts have linked the shortage in dollar to a wave of depreciation caused by a speculative attack on the naira and a high demand from companies and private individuals.

It was noted that after trading between N423 and N425 per dollar, for several weeks, the naira increased to N428 last Wednesday, which came a day after the Central Bank of Nigeria’s Monetary Policy committee retained the lending rate at 14 percent contrary to calls by the fiscal authority, economists and stakeholders.

Though analysts dismissed that the recent declines had links with the MPC's decision, which retained the lending rate at the current rate, but at the interbank market, on Thursday, the naira closed at 305.31/ dollar, up from 312.99 on Wednesday.

According to Gwadabe, the planned commencement of distribution of forex by Travelex could not hold due to some bottlenecks.

He said that Travelex, an international money transfer organization, ought to have begun the Forex distribution to the BDC operators on Monday, but was postponed to Wednesday which still did not hold.

Following the words of ABCON leader, the sale of forex to the BDC operators by Travevelex, would help to stem the tide of volatility in the exchange rate and subsequently close the gap between the official and parallel market rates.

Saying that the latest decline in the naira was as a result of the activities of speculators, He added that Travelex has the technology to sell Forex to about 1,000 BDCs in a couple of hours, which is a major advantage.

Mr. Kunle Ezun, a currency analyst at the Ecobank Nigeria, said in his words “these rising exchange rate currently at the parallel market, are not realistic, because it has to do with speculators.

“The fact that there is an acute and chronic shortage of forex cannot be over ruled, for there is a genuine demand which the supply cannot match, because inflows have dropped significantly”, Mr. Kunle added.

Gwadagbe further said “several sharp practices have been ongoing in the forex market and these elements want to continue making profits from the status quo, which is why it is speculating against the naira”.

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