• Sunday, May 26, 2024
businessday logo

BusinessDay

Naira extends decline at official market as rate hits N1,308/$

Naira loses 1.47% on black market after rate hike

The naira weakened for a fourth straight day at the official market (NAFEM) on Wednesday, sliding to a low of N1,308 per US dollar, according to data by the FMDQ Securities Exchange, as dollar supply thinned.

The naira also fell on the black market despite the CBN’s dollar sales to BDCs on Monday.

A dollar sold for N1,350/$ in the black market, up from N1,270 quoted the day before, according to multiple traders who spoke with BusinessDay.

On Monday, the CBN sold dollars to the BDCs at a rate of N1,021 per US dollar, with instructions to sell to eligible end-users at a spread of not more than 1.5 percent above the purchase price.

The sale was expected to relieve the renewed pressure on the naira, which snapped a one-month rally last Friday.

Analysts and traders told BusinessDay that a high volume of demand paired with dollar scarcity is driving the naira’s decline in the FX market.

“We buy dollars at N1200, and there’s not much dollars, so the price will be high,” Suleiman, a BDC operator, said.

“Demand for the dollar is going up, but supply is not matching the demand, which is causing a distorted market,” said Samuel Ladipo, portfolio manager with Lead Assets Management Limited.