Foreign exchange; Naira lowest against the dollar in 2years

The naira on Wednesday fell to its lowest level in over two years against the United States’ dollar. This, according to foreign exchange dealers, is as a result of the continued inability of the Central Bank of Nigeria to meet the demand for the dollar; a development which they said had stretched for straight 21 days.

At the inter-bank market, the naira closed at N157.92 to the dollar, down from Tuesday’s figure of N157.20. Traders told Reuters that the current position of the naira was its weakest since August 14, 2009, when it hit N158 per dollar
Out of $560.54m requested for by dealers at the official window on Wednesday, the apex bank only sold $350m at N154.42 to the dollar. The CBN had the preceding day sold $350m at N153.91 as against $467.6m demanded by dealers.
“The initiatives taken by the CBN both in raising MPR and other measures of tightening our fiscal policy may mean well but are telling on the forex market,” the Managing Director and Chief Executive Officer, Atlass Portfolios Limited, Mr. Ubale Yahaya, told our correspondent.
“The naira for some time now has persistently fallen against the dollar and this is not good for our currency.”
The CBN, among its other reforms, had on Monday raised the Monetary Policy Rate by 50 basis points from 8.75 to 9.25 per cent.
Meanwhile, traders stressed that the pressure on the naira was largely due to the actions of the regulatory bank, as they argued that the apex financial institution had over time refused to meet the demands of dealers.
“The central bank has consistently allowed the depreciation of the naira at its auction in past months and with a large inventory of unmet demand, putting further pressure on the available dollar stocks at the inter-bank market,” a dealer told Reuters.
According to traders, the inter-bank market usually takes a cue from the trends at the bi-weekly foreign exchange auction.
They however, noted that local unit of US energy firm, Exxon Mobil, sold about $50m to selected banks, but it was not enough to provide support for the naira.
The traders expressed worries that the local currency might continue its downward plunge if the apex bank failed to intervene.
“The naira is going to continue to experience steady depreciation until the end of the year as long as there is strong demand and the CBN fails to meet market expectations,” another trader, who pleaded anonymity said.-punch