The naira fell against the United States dollar from 485
to 490 at the parallel market on Wednesday, reversing
part of the gain it had recorded against the greenback
last week.
The local currency, which had fallen to 495/dollar last
Thursday, recorded some gains and closed at 485/
dollar on Friday.
Since Friday when the Christmas holiday was
announced, the naira closed at 485/dollar at the parallel
market.
On Tuesday, three days to the end of the year, the naira
traded flat and was sold for 485 per dollar on the
streets of Lagos and Abuja.
Currency experts have predicted the naira will weaken
against the greenback as the New Year approaches.
Specifically, they said the naira might fall to 500/dollar
this week.
Last Monday and Tuesday, the naira traded flat at 490
after closing at 487/dollar the previous Friday.
The naira has been under severe and continuous
pressure as the scarcity of the US currency continues to
create ripples in the financial markets and economy.
The naira plunged to 470/dollar, down from 455/dollar
on the back of dollar shortage at the official and
parallel forex markets some weeks ago.
The naira has, however, consistently closed around
305.5 a dollar level since August via the official
window.
A Director at Union Capital Markets, Mr. Egie Akpata,
said it was really difficult to predict the direction of the
naira currently because part of the currency market had
shut down for the year.
You can’t really predict the market now because part of
the market has shut down for the year.
Things will really
take shape next week. Currently, it could swing
anywhere.”
Currency dealers said the consistent clampdown on
black market operators by security agents had
compounded the naira problem, putting more pressure
on available dollars.
The CBN had on June 20 lifted its 16-month-old naira
peg, following overwhelming dollar demand from
companies and calls for a free floating of the naira by
industry experts.
Experts, however, argued that the central bank had yet
to fully allow the naira to float freely.
The CBN has struggled to support the naira as the
country’s external reserves continue to fall.
Dollar shortages have caused many companies to halt
operations and lay off workers, compounding an
economic crisis exacerbated by the fall in global prices
of oil, which accounts for over 70 per cent of Nigeria’s
budget revenue.
Meanwhile, the Bureau De Change operators are now
getting $8,000 each per week against the usual $15,000
each per week.
Economic and financial experts said unless the lingering
dollar supply problem was abated, the volatility in the
exchange rate and the consequent economic challenges
might continue.
However, the currencies of Uganda, Kenya and Zambia
are seen trading sideways this week as most investors
closed positions ahead of the end of the year,
according to a Reuters report.
