Naira firms at interbank, parallel markets on low dollar demand

The naira on Thursday firmed a little at the parallel market to N423 a dollar from N 425 to the dollar last week. The local currency at the interbank market also firmed to N306.93 as against N308 to the greenback exchanged on Friday.

Nigeria’s currency, the naira is expected to remain stable around the present level at both official interbank and parallel markets.

This comes as demand from holiday makers slow and the Central Bank of Nigeria ups its support for the local currency at the official window.

“We don’t expect any major depreciation of the naira in the near term as most summer holiday makers are back and demand for the dollar slow a little,” Aminu Gwadabe, president of association of bureau de change operators said.

The naira has been under a persistent pressure as dollar scarcity continues to weigh on the local currency at both the parallel and interbank forex markets, even as traders say dollar supply had improved.

Nigeria was Africa’s largest economy and its top oil producer, but its public finances have suffered as the price of crude oil dropped around the world.

The naira first touched N400 on the black market last month.

The Central Bank has been selling dollars almost daily to boost liquidity and support the naira, but the lack of dollar liquidity has curbed interbank activity, leaving the Central Bank as the main supplier of dollars.

Currency traders have continued to wait for offshore flows to return.