Naira Continues Depreciation at BDC, Parallel Markets

 By Obinna Chima

21 Mar 2011

CBN Governor, Sanusi Lamido Sanusi

The naira, Nigeria’s local currency which has been under pressure over rising demand for the US dollar in recent times slumped further at both the Bureau De Change (BDC) and parallel segments of the forex market on Friday as demand for the greenback continue to mount.

This was more evident at the parallel market where the local currency attained its lowest value in the past one year.

For instance, at some parallel market points at Ikeja, Lagos State, THISDAY findings showed that the naira which traded at N156.50 to a dollar at the beginning of the last week, hovered around the N157.50/$1 and N158/$1 band on Friday..

Similarly, at Marina, Lagos, most black market operators offered the local currency for N158 to a dollar on Friday as against the N156.50 /$1 it stood the preceding week. 

Data made available by the Financial Market Dealers Association (FMDA) on Friday further confirmed the development as showed that the local currency was badly injured.

Specifically, the FMDA report showed that at parallel market, the naira was bruised significantly as it dropped by N1 to N158 to a dollar on Friday, compared with the N157 to a dollar it went for the preceding week.

 In the same manner, the FMDA report showed that the local currency also dipped by 50 kobo to trade at N157 to a dollar at the BDC on Friday, as against the N156.50 to a dollar it attained the preceding week.

The CBN Governor, Mallam Sanusi Lamido   said  recently that the rising demand for forex was temporary, even as he attributed the trend to investors’ fears that violence between religious and ethnic groups may disrupt elections.

The Governor had stressed that with a country like Nigeria going into elections and with talks about ethnicity and religion, a lot of people have been trying to buy dollars and hedge their risks, saying that puts pressure on the exchange rate and foreign currency reserves.

He had emphasised that while the apex bank is concerned about the impact of rising government spending, oil and food costs on inflation, the short- term impact of raising interest rates is “questionable.”

 “So long as we are comfortable with the coverage given by the reserve position of the country we will pursue a stable exchange rate policy. If we see an elevation in demand, that in our judgment is temporary, we will meet that demand,” Sanusi had said.

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