Naira now N500 to one pound at parallel market

The Nigerian naira recorded mixed performance across market segments as it strengthened at the interbank market, but crashed at parallel market, on Wednesday, August 3.

The local currency’s parallel (black) market value which had slipped to N381/$1 on Tuesday dropped a shocking 9 points to trade at N390/$1 yesterday, even as it also crashed to N500 to one pound and N422 to one Euro at the same market.

Contrariwise, the local currency on Wednesday appreciated at the interbank segment of the market as it closed at N311.06, compared to N316.83 to the dollar it exchanged for on Tuesday.

This is even as the naira exchanged for N415.8606 to the Pound Sterling and N352 to the Euro on Tuesday.

The naira has been under persistent pressure as dollar scarcity continues to weigh on the local currency at both the parallel and interbank forex markets. Economic and financial experts said inadequate forex liquidity at the interbank market was taking a toll on the parallel market.

Currency analysts at Cowry Assets Management Limited are worried that the increasing gap between the interbank market rate and the parallel market rates may create arbitrage and round tripping opportunities soon, even as they said there is likely to be sustained pressure on the naira as the green back remains in short supply.

In the just concluded week, the Nigerian naira depreciated against the U.S. greenback at all the foreign exchange market segments, as dollar liquidity remained tight at the interbank market. The local currency depreciated against the United States’ greenback, week-on-week by 7.02 per cent to N316.13/USD amid strain in dollar supply as Central Bank of Nigeria did not intervene in the Secondary Market.

Meanwhile, CBN settled $697 million in matured one month futures contract, being total settlement amount to its banking counterparts at N279/$ on Wednesday, 27 July, 2016. The expired contract was replaced by a new one year contract, naira/dollar July 19, 2017,with a total amount on offer of $1 billion at N250/USD.

Foreign exchange traders executed 51 deals worth $189.37 million between Monday and Thursday. The local currency also depreciated at the Bureaux De Change and the parallel (or “black”)market segments by 1.37 per cent  and 0.80 per cent  to N370/$ and N378/$ respectively as unmet dollar demand continued to spill into the alternative market segments.