LAGOS, JULY 15, 2016 – Naira tumbled 4.3 percent to another record low against the dollar on Friday as the central sold dollars to try and boost liquidity on the interbank market, traders said.
The naira hit 295.25 in thin trade, a month after the central bank caved in to months of pressure to remove its currency peg and effectively devalue the unit in response to falling prices for oil. It recovered to close at 290, 2.7 weaker on the day.
Traders say a lack of dollars has curbed activity since the peg was removed, leaving the central bank as the main supplier of hard currency.
On Friday a total of $12 million traded on the interbank market at an average rate of 290 naira, with traders attributing the sale to a central bank intervention.
“The naira is weaker because of liquidity,” one trader said.
Other past suppliers of dollars, including oil firms, are now selling part of their hard currency directly to petrol importers under an arrangement with the government, traders say.
In non-deliverable forward markets, the one-month naira-dollar forward were quoted at 300. The one-year contract fell as low as 347 per dollar.
On the black market the naira was quoted at 365 on Friday.
Economists are demanding that Nigeria allows the naira to find its true level so that offshore investors who are on the sidelines waiting to see where the naira settles can come back to the country.
“You have to let the market decide where the naira is going to be, to start with, before inflows come in and then, when the inflows are in, you have an appreciation of the naira,” former central bank governor Lamido Sanusi, was quoted as saying in ThisDay newspaper.
