Naira eases to N378 to dollar at parallel market

The Naira on Monday lost N2 to close at N378 against the U.S. greenback at the unofficial segment of the foreign exchange market.

Dealers said this followed reports of pressure in foreign exchange supply, mainly at the interbank market segment, where the Naira slipped 2.5 percent to a new closing low of N310 per dollar on Monday as against Friday’s close of N307 to the greenback.

The local unit failed to lure in local investors, or foreign players as trade dried up a day before an expected interest rate hike from the central bank.

The Naira also closed at N340.504 to the Euro, and N406.875 to the British Pounds.

Last Thursday, the naira fell through N300, a month after the central bank lifted its controls on the currency.

On Friday it hit an all-time intraday low of N331 before recovering ground by the close.

The central bank had hoped that scrapping the dollar peg and letting the currency fall by a third would help attract investment and erase the need for a black market, where the naira trades another 17 percent weaker against the dollar.

But some foreign players have stayed out of the market, traders say, adding that they will be closely watching the outcome of the central bank’s policy meeting on Tuesday.

Leading economic and finance analysts are divided over what should be the appropriate decision of the Monetary Policy Committee (MPC) in an economy said to be in recession, with inflation at 16.4 per cent higher than benchmark interest rate of 12 per cent.

Also, analysts at an international equity firm, Renaissance Capital fears that in an import-dependent Nigeria, where all fuel and one-quarter of the food consumed are imported, it comes as no surprise  that consumer confidence and the more market-driven parallel  foreign exchange market rate are negatively related.