IN the just concluded week, the naira depreciated against the U.S. greenback at all foreign exchange market segments amid reports of pressure in foreign exchange supply, mainly at the interbank market segment.
As a result, the local currency spot rate depreciated by 2.99 per cent to N292.25 from N284 to the dollar which it closed at on Thursday; even as it closed at Thursday’s rate of N316.944 to the Euro and N380.44 British Pounds.
The Naira also depreciated at the Bureau De Change and the parallel market segments by 2.90 and 3.13 per cent to N355/USD and N363/USD respectively as demand at the interbank market spilled over to the alternative market segments. At the same unofficial market segment, the local currency fell to its lowest level since the start of the new foreign exchange regime, trading at N392 to Euro and N465 to the Pound Sterling, a Lagos based Bureau De Change operator revealed.
Though in some areas in Lagos, street traders said weakening of the Naira at the parallel market was mixed but finally settled at N357.00/US$1.00 by midweek before closing at N365.00/US$1.00 on Friday.
Currency analysts at Cowry Asset Management Limited said there might be increased pressure on the local currency at the Central Bank of Nigeria prepares to settle currency futures contract. Others agreed that the spike would continue this week unless the CBN took action to address the supply gap at the interbank market
“We anticipate increased upward pressure on the foreign exchange (forex) rate as the apex bank prepares to settle its obligations on its 1 month (July2016) tenor futures contract entered on Monday,27 June 2016 at the rate of N279/USD,” the dealers said in a note to investors.
The naira fell consistently at the interbank market last week. It depreciated at the interbank market to N282.5, N283.25, and N283.75 against the dollar between Monday and Thursday.
Foreign exchange dealers told Nigerian Tribune last week that a huge volume of demand was moving from the interbank market to the parallel market due to the forex supply gap at the interbank market.