• Saturday, March 02, 2024
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BusinessDay

Naira weakens on parallel market as dollar demand rises

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The naira reversed its gains against the dollar on the parallel market on Tuesday on increased demand for the U.S. currency from some importers, traders said.

The local currency was trading at 224 to the dollar on Tuesday, weaker than 216 the previous day. It was quoted at 240 a week ago.

On the official interbank market, the naira traded at 199 to the dollar at 1137 GMT, unchanged from the previous day and near the central bank’s pegged rate of 197.

Nigeria’s naira had firmed on the parallel market after commercial lenders stopped accepting cash deposits in dollars, a move to discourage speculation on the currency.

“We have seen increased demand for dollars again by some end users taking advantage of the gains recorded in the past few days,” Harrison Owoh a bureau de change operator said.

There was concern that the naira gain on the black market would be short-lived, triggering a a surge in dollar buying.

The naira had weakened on the parallel market to as much as 242 to the dollar last month, on persistent dollar demand after central bank last month limited importers’ access to dollars on the official interbank market to buy a wide range of goods, in order to save its reserves.