Naira on Tuesday slide again against the US dollar, losing N2.00k/$ at the inter-bank foreign exchange market due to strong demand by importers and manufacturers for their financial obligations.
After trading on Tuesday, the local currency closed at N189.10/$ compared to N187.10k/$ the previous day, according to data obtained from Financial Markets Dealers Quotations (FMDQ).
Meanwhile, the CBN yesterday kept its policy rate at 13 percent, offering no new measures to deal with a record low currency and inflationary risks linked to a collapse in world oil prices.
Godwin Emefiele, CBN governor, noted at the Monetary Policy Committee (MPC) meeting on Tuesday that significant pressure persisted in the foreign exchange market during 2014 resulting in further weakening of the naira across the three segments of the markets.
The exchange rate at the Retail Dutch Auction System (RDAS)-spot opened at N157.34/US$ (including 1% commission) and closed at N164.08/US$, representing a depreciation of N12.34 or 4.28 percent. The inter-bank selling rate opened at N165.7/US$ and closed at N180/US$, representing a depreciation of N14.73 or 8.63 percent in the period, while at the BDC segment, the selling rate opened at N170/US$ and closed at N191.50/US$ representing a depreciation of N21.50k or 12.64 percent.
The bank has struggled to keep the naira in a new trading range since devaluing it by 8 percent against the dollar in November in a bid to halt a slide in its reserves.
The currency has continued to weaken as Africa’s biggest oil producer has been hit by the slump in oil prices and as a strong U.S. dollar has hurt emerging market currencies. It ended at a record closing low on Tuesday ahead of the central bank rate decision, and has been trading well below its targeted trading band.
The NGN depreciated 1.1% against the USD at the inter-bank (-1.34% YTD) on January 19. Inter-bank depreciation was driven by stronger than expected USD demand to cover import bills (energy and manufacturing sectors) and capital flight ahead of the elections. It closed at USD1:NGN187.10. Meanwhile, the twice-weekly CBN’s RDAS continues to be influenced by the new CBN’s mid-point of USD1:NGN168.0 +/- 5%. The CBN sold USD199.9 million on January 19 at USD:NGN168.00, a report by Ecobank noted.