Naira depreciates further to N385/$, N505/£ in parallel market

The naira on Wednesday depreciated further to

N385 per dollar in the parallel market as

demand for foreign exchange intensified in the

market.

This implies the naira has depreciated by N60

against the dollar this week in the parallel

market, when compared with the closing

exchange rate of N325 per dollar Friday last

week.

The currency however remained stable at the

official interbank foreign exchange market as

the interbank rate closed N199.34.

Thus the gap between the interbank and

parallel market rates widened to N185.66 per

dollar from N127.53 Friday last week.

Vanguard investigation also reveals that the

naira depreciated against the British Pounds to

N505 per pounds in the parallel market

implying N65 depreciation when compared

with the closing rate of N440 Friday last

week.

Investigations reveal that the sharp

depreciation of the naira in the parallel market

this week is driven by increasing demand by

importers sourcing dollars to pay for imports

from China.

According to a BDC operator who spoke on

condition of anonymity, “You know China

had been on its one month annual holidays.

But they resumed work on Monday, and

people have to complete payment for goods

ordered before the holidays. They had made

30 per cent down payment to order the goods

and they now have to pay the 70 percent

balance otherwise they will lose the 30 percent.

That is why they are desperate and ready to

buy dollars at any rate. Meanwhile supply is

scarce and those who have dollars are not

willing to sell because they might also need the

currency soon”.

The naira has been on steady decline since

Tuesday January 12 2016, when the

Central Bank of Nigeria (CBN) stopped

weekly dollar sale to BDCs. Prior to this

action, the naira traded at N265 per dollar in

the parallel market. Consequently the naira has

depreciated by N80 in the parallel market since

the CBN took the action.