Tuesday, July 27, 2021

    Nigeria’s naira exchange rate weakens as dollar shortage worsens

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    Godwin Okaforhttps://naija247news.com
    Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

    Lagos Nigeria Feb 8 – Nigeria’s naira fell on Monday and bid-ask spreads widened as the local spot currency market struggled with a scarcity of U.S. dollars, traders said.

    One dealer at a top-tier Nigerian bank quoted the naira at 395-402 per dollar in the over-the-counter market from 392-394 naira in the previous session. Others quoted the naira at 397.21 to the dollar.

    Traders said few deals were executed between banks as rising demand for dollars from importers and foreign investors seeking to repatriate funds piled pressure on the naira.

    Nigeria’s currency has been losing ground on spot and derivatives markets, mirroring weakness on the black market, where it trades more freely.

    The naira dropped to a record intra-day low last week on the spot market and has been quoted at 480 naira to the dollar on the black market since last month, against the official rate of 381 naira, set in July and backed by the central bank.

    The central bank nearly doubled open-market Treasury yields last week to lure investors after revising its futures contracts upwards. The move pushed up rates on the forwards market.

    The bank adjusted the exchange rate last year, after an official devaluation in March, in an attempt to align multiple quoted currency rates. But the naira has continued to weaken.

    The International Monetary Fund on Monday called on Nigeria to adopt a gradual and multi-step approach to establishing a unified and clear exchange rate in order to clear a backlog of payments.

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