Naira closes slightly lower to dollar at parallel market

The Naira on Monday depreciated to N282.47 to the dollar as against Friday’s  close of N282.02 to the greenback.

Also, the local currency on Monday closed slightly lower to N367.024 against the British Pounds compared to  N366.1206 traded on Friday.  It also lost to a little ground to the Euro as it traded for N312.219 on Monday compared to Friday’s close of N311.9484 to the Euro at the inter-bank market, even as the local currency at the parallel market traded for N353 to the dollar.

Meanwhile, analysts led by the Managing Director of Financial Derivatives Company  (FDC) Limited, Mr Bismark Rewane said the market is still digesting the impact of the N1.3trillion debit by the Central Bank of Nigeria (CBN) for the $4.02 billion forward currency sale on June 20th.

The bank auctioned $3.5 billion on the futures market to clear a backlog of currency demand after it lifted its 16-month-old peg to allow the naira trade freely on the interbank market.

It sold $697 million in one-month futures, $1.22 billion in two-month contract and $1.57 billion due in three months.

“The naira is still trying to find its true value in the transition from an imperfect towards a more efficient forex market. The apparent lack of liquidity in the spot market is hampering the effective development of a forward and futures market. A 0.4 per cent of a decline in the rate of inflation will be exchange rate neutral.

“The market will be awaiting the outcome of the next monetary policy committee direction. It will also be looking forward to CBN’s willingness and ability to settle the 90-day forward contracts entered into on June 20th; maturing on September 17th. However, analysts will derive some comfort from a lower inflation rate because the Purchasing Power Parity value of the naira will actually appreciate,” the FDC analysts stated in their recently released July Economic Bulletin.