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Nigerian naira eases on black market

Published 25/11/2020, 17:12
© Reuters.

By Chijioke Ohuocha
ABUJA, Nov 24 (Reuters) - Nigeria's naira currency eased on
the black market on Wednesday, traders said, after the central
bank said the small size of the unofficial market means it
should not be used to determine the naira's value.
Central Bank Governor Godwin Emefiele on Tuesday responded
to calls for further depreciation of the naira, which has
weakened by 28% this year, by saying the black market rate
should not be used to determine the naira's value.
"We don't agree that the exchange rate should be determined
by a market that is tainted with corruption," Emefiele said
after a monetary policy committee meeting that left interest
rates on hold.
The naira has come under pressure because central bank
policies restrict access to the official window, thereby
funneling demand to a black market that holds less than 5% of
trades and patronised mostly by those without proper
documentation.
The naira was around 485-487 against the dollar on the black
market on Wednesday after reaching 483 earlier in the day,
traders said. It has been stuck at 381 per dollar on the
official market since July - at a 21% discount to the black
market rate.
Nigeria has been hard hit by the impact of coronavirus
pandemic, which has led to a collapse in the price of oil, its
main export. That has hammered government revenue, weakened the
naira and created dollar shortages in the country.
The central bank has been selling dollars to foreign
investors seeking to repatriate funds and to clear a backlog,
but demand is swelling as importers seek dollars to buy goods
ahead of Christmas sales, traders say.
The naira traded at 387.67 on the over-the-counter official
spot market NAFEX=FMDQ , quoted by investors and importers, on
thin volumes.

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