The naira fell further to 363 against the dollar at the parallel market on Thursday, as the scarcity of foreign exchange continued to weigh on the value of the local currency at the interbank and parallel markets.
The naira had closed at 360 to the dollar at the parallel market on Wednesday.
The local currency also dropped against the greenback at the interbank official market to 284 per dollar on Thursday. The naira has fallen consistently at the interbank market this week, a development that is reflected in the volatility it has recorded at the parallel market.
The currency depreciated at the interbank market to 282.5, 283.25, 283.75 against the dollar between Monday and Thursday.
Foreign exchange dealers told our correspondent on Thursday that a huge volume of demand was moving from the interbank market to the parallel market due to the forex supply gap at the interbank market.
“It is a supply and demand market. A lot of demand is being pushed to the parallel market due to the shortage at the interbank market; it appears that the interbank market is being rigged,” the National President, Association of Bureau De Change Operators, Aminu Gwadabe, said, adding, “There is the need to really douse the tension.”
Currency analysts said they believed the spike would continue next week unless the CBN took action to address the supply gap at the interbank market
A top player at the interbank market, who spoke under condition of anonymity, said, “The flexible exchange rate policy that commenced a few weeks ago is a good move by the CBN. However, the N280/dollar level where it started was not a true reflection of the value of the naira.
“This is why the foreign portfolio investors, who can bring forex liquidity to the interbank market, are not coming into that market. The CBN should have allowed the market to start around N300/dollar.”
The naira, which closed at 348 against the greenback at the parallel market last Friday, dropped to 351 on Monday before plunging further to 354 and 360 on Tuesday and Wednesday, respectively.
Meanwhile, the naira was reported to have taken a dive on Thursday at both the parallel and official markets, becoming the worst performing currency in Africa in 2016, according to Bloomberg data.
The currency, which began trading at around 283 to the dollar at the interbank market on Thursday, depreciated to 284 to become the third worst performing currency in the world for 2016.
The naira, according to Bloomberg data, came ahead of only two currencies in the world – Venezuela’s bolivar and Surinam’s dollar.