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Nigeria’s naira hits record low of N672/$ on parallel market, falls 0.90% on I&E window

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By Oludare Mayowa

Nigeria’s naira hit a new low of N672 to the greenback on the parallel market on Tuesday, traders said, as foreign exchange scarcity persisted across board.

The local currency was quoted by bureau de change operators at N654 to the dollar on Friday while by Monday the naira fell to N660 to the greenback at the unofficial market.

Also, the local currency declined by 0.90 per cent on the official foreign exchange market, down to N431 to the dollar compared with N427.17 the previous day.

Traders attributed the decline in the exchange rate to the fact that those who have the dollar are not selling because they foresee it depreciating further in the coming weeks due to demand pressure and scarcity at the official window.

 READ ALSO: Nigeria shares N802 bln among 3-tiers from revenue generated in June

The spread between the Investors and Exporters forex (I&E) window has now widened to N244.83, which pose threat to the stability of the naira on the official market.

Traders said most participants at the I&E foreign exchange window maintained bids between N414.00 and N444.00 per dollar on Tuesday.

Despite the recent increase in the nation’s foreign exchange reserves to around $39.38 billion by July 22, from $38.84 billion a month earlier, the naira has consistently weakened on both markets as many fear the pressure on the dollar pre-election year would persist the February when the election is conducted and a winner emerged.

“The uncertainty around forthcoming election would continue to put pressure on the available hard currencies across the market as more foreign portfolio investors try to exit the market and some Nigerians hedge their liquid assets against depreciation and erosion from high inflation,” the chief executive of financial service firm told one of our correspondents.

The second half of this year will also witness rising exchange rates due in part to the exit of foreign investors as well as increased demand for forex by Politicians as well as rising yields in the fixed income market, university professor Uche Uwaleke said at a conference on Tuesday in Lagos.

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