Nigeria naira slides past N400 per dollar on black market -traders

Despite series of currency forwards sold by the central bank of Nigeria (CBN) this month to clear demand for dollars on the official market, traders said the local currency, naira was said to have slid pass N400/$ on the black market on Friday amid tight dollar supply, report Reuters,

The naira was quoted at N405 per dollar on the black market on Friday. It traded at 306.15 on the official market. At other local sales sports such as Allen, Surulere, the local currency was exchnaging for between N404/N406 per dollar.

CBN has sold more than $1 billion on the forward market since February. It auctioned $250 million in forward sales this week to boost liquidity and also intervened on the spot market.

Traders said the forward sales have improved liquidity but left the spot market inactive, leaving importers that want hard currency for immediate use reliant on the black market.’
Analysts at the Cowry Asset Management said at the wekend that  in the just concluded week, Naira depreciated against the greenback at the interbank foreign exchange market by 0.08% to close at N314.87/USD.
According to the analysts, “this was inspite of sales of USD100 million through foreign exchange two months delivery forwards by CBN on Thursday to banks. International Money Transfer Operators (IMTOs) also supplied USD10,000 each to 3,135 licensed Bureau De Change (BDC) operators in the country, totaling USD31.35 million.
The local currency also depreciated at the Bureau De Change and parallel (‘black’) market segments by 1.84% and 1.79% to N387/USD and N397/USD respectively”
Howeverm they said that the weekly movements in most dated forward contracts at the interbank OTC segment suggested future stability of the Naira viz-a-viz the US greenback amid a slight increase in the foreign exchange reserves.”
Africa’s biggest economy is facing a currency crisis brought on by low oil prices, which has hammered its foreign reserves and created chronic dollar shortages, frustrating businesses and individuals.

The central bank has been intervening on the official market this year to try to narrow the currency gap with the black market rate, which hit 520 to the dollar in February, prompting the bank to devalue the naira for consumers to 375.

February’s partial devaluation created multiple exchange rates, making it difficult to attract inflows as investors struggle to price naira assets, analysts say.

On Wednesday the International Monetary Fund (IMF) said the naira was over-valued by around 10 to 20 percent, and called for changes to exchange rate policy. (Reporting by Chijioke Ohuocha; editing by Mark Heinrich)