Naira falls across markets as dollar shortage bites harder

The naira reversed its gain the previous day as it yesterday depreciated in value against the dollar across segments of foreign exchange (FX) market following supply shortage.

After trading on Wednesday, the naira lost N1 or 0.33 percent each at Bureau De Change (BDC) segment of the FX and the parallel market. It closed at N303/$ on Wednesday, compared with N302/$ the previous day at the BDC segment, while it closed at N305/$ from N304/$ on Tuesday.

At the inter-bank FX market, the local currency weakened against the dollar by N0.44k or 0.22 percent, as it closed at N199.35k/$ as against N198.91k/$ the previous day, according to data from FMDQ.

The CBN’s clearing rate remained unchanged, closing at N197/$ at the inter-bank FX, as seen on FMDQ website.

The Monetary Policy Committee (MPC), which on Monday and Tuesday met for the first time in the year, noted that the ongoing activities in the informal segment of the FX market led to the stoppage of dollar sales to BDCs, even as the average naira exchange rate remained relatively stable at the inter-bank segment during the review period.

The exchange rate at the inter-bank market opened at N197/$ and closed at N197, with a daily average of N196.99/$ between November 23 and January 11, 2015. The Committee underscored the necessity of improving the supply of FX to the market, especially from autonomous sources. It also reiterated its commitment to maintaining stability in the naira exchange rate.

Investors have seen a devaluation of the naira as long overdue for Africa’s largest economy and biggest oil exporter, which has been battered by the tumble in crude prices, Reuters had reported earlier.

Despite growing pressure, Nigeria’s government has kept the naira pegged at around N198/$ on the official interbank market, while restricting access to dollars.