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HomeTop NewsNigeria's naira weakens to N710/$, widening gap between official, parallel markets to...

Nigeria’s naira weakens to N710/$, widening gap between official, parallel markets to N280 per dollar

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By Samuel Bankole

The Nigerian naira currency weakened further on Wednesday at the unofficial market, as it was quoted N710 to the greenback, down from N672 to the US dollar, traders said.

The local currency was quoted by bureau de change operators at N660 to the dollar on Monday and fell to N672 to the greenback at the parallel market on Tuesday.

However, the local currency appreciated at the I&E FX market by 0.23 per cent to N430.00 as against the last close of N431.00.

Traders said most participants maintained bids between N410.00 and N444.00 per dollar at the official window.

The local currency has sustained a downward trend since last year when the Central Bank of Nigeria (CBN) suspended dollar sales to bureau de change operators, blaming them for the rapid depreciation of the currency.

READ ALSO: US Fed Reserves jerk up interest rate by 75 basis points to tame inflation

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.

The spread between the Investors and Exporters forex (I&E) window has now widened to N280 to the dollar, creating more incentives for arbitraging by speculators.

The country’s foreign exchange reserves decline to $39.27 billion by July 26, from $39.44 billion in July 18, 2022, losing $170 million within the space of one week.

“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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