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HomeTop NewsUPDATE: Nigeria's naira falls 0.59% to N505/$ at parallel market

UPDATE: Nigeria’s naira falls 0.59% to N505/$ at parallel market

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By Oludare Mayowa

 

The Nigerian naira weakened against the dollar on the parallel market on Tuesday, closing at N505 to the dollar compared with N502 a dollar on Monday, triggered by speculative buying of hard currencies and hoarding, traders said.

The country’s currency fell 0.59 percent against the dollar at the close of the market, having lost 0.39 percent intraday, according to dealers.

Also, at the Investors and Exporters forex window, the naira depreciated by 0.23 percent as the dollar was quoted at N411.75 against the last close of N410.80.

Traders said most participants maintained bids between N400.00 and N430.00 per dollar.

The naira had stabilised at N502 to the dollar on the parallel market for a whole week after the currency depreciated by 3.08 percent in May

The local currency woes began three weeks ago after the last Monetary Policy Committee (MPC) meeting when the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele confirmed that the regulator had adopted the NAFEX forex exchange rate as the benchmark rate for the market.

The naira had traded at N487 to the dollar middle May before the CBN announced the adjustment in the official rate to reflect market-determined exchange rate as required by the International Monetary Fund (IMF) and the World Bank.

Nigeria seeks to borrow $1.5 billion from the World Bank to support its budget deficits and plug the spending gap necessitated by shortfall in revenue due to the impact of the Covid-19.

However, the bank insisted that Nigeria adopt a more flexible exchange rate against the managed float and narrow the multiple exchange rates in the country to qualify for its lending.

Dealers said the naira free fall since the CBN announcement was due to the fact that many Nigerians prefer hedging against further fall by holding their assets in dollars.

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Analysts also said the growing inflationary rate has not helped the naira value as many would rather increase foreign assets than domestic assets to preserve their wealth.

The pound sterling has also depreciated to N716 per sterling as of Tuesday from N713 to the pound sterling last week while the Euro closed at N608 and N606 to the Euro.

Last week, the House of Representatives directed the CBN to urgently put in place a policy to check further devaluation of the naira to the dollar and other international legal tenders.

The resolution of the House was sequel to the adoption of a motion of urgent national importance moved at plenary Wednesday by  Bamidele Salam.

 

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