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Nigeria's naira falls amid dollar shortage

Published 08/02/2021, 18:12
Updated 08/02/2021, 18:18
© Reuters.

By Chijioke Ohuocha
ABUJA, Feb 8 (Reuters) - 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
NAFEX=FMDQ 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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