Naira heads South to N294.57/$ at interbank market

AT the interbank foreign exchange (forex) market, the naira eased by 0.83 per cent, trading at N294.57 to a dollar from Monday’s close of N292.15 to the greenback.

Also, the local currency at the official window exchanged for N387.3672 to the Pound Sterling and N 322.8936 to the Euro on Monday, it weakened at the parallel market against the Pound Sterling, but maintained same value with the Euro as it exchanged for N475 and N400 respectively, from N470 and N400 it traded on Friday.

Nigeria’s currency has remained at N365/$1 at the parallel market Tuesday, July 19, as it was on Monday, July 18.

Currency traders said this leaves Naira’s black market value unchanged since it narrowly dropped 2 point from N363 to trade at N365 by midday on Tuesday.

While some of the traders in Lagos blamed the poor performance of the local unit on scarcity of the greenback, adding that the demand for dollar far outstripped its supply, some currency analysts attributed it to the decision by authorised dealers to restore the 50 kobo offer spread on the currency in the forex market.

Diana Egeolu, Head, Foreign Exchange Trading at Sterling Bank, speaking on the directive by  the Financial Market Dealers Association (FMDA) that its members should  restore the 50 kobo spread on offers, explained that the move entails that “you can buy at any price, but when you are selling to your client, the spread should not be more than 50 kobo.”

Shedding more light in a TV program monitored in Lagos, she said what necessitated the decision was the anticipated funding of the one-month forward contracts of $698 million  by the Central Bank of Nigeria (CBN).

The first tranche of the N280/$1 30-currency forward contract is expected to mature this Friday, and will be funded by the CBN.

Egeolu added that it is expected that the naira does not fall below N300 to a dollar before the Monetary Policy Committee (MPC) meeting next week.

However, dealers said the three-month non-deliverable forward contracts jumped 4.1 per cent to a record N329 a dollar, while contracts maturing in a year rose 3.3 per cent to N363, the highest level on a closing basis.