The Nigerian currency extended its slide against the dollar on Wednesday, dropping to a new all-time low at the parallel market in Lagos.
The naira has been falling steadily since the start of this month amid the lingering scarcity of foreign exchange in the country, despite the rise in forex reserves.
The value of the naira fell against the US currency at both the parallel market and the Investors’ and Exporters’ forex window on Wednesday.
The local currency, which stood at 526/$1 at the end of last month, fell to 535/$1 at the parallel market on Wednesday from 532/$1 on Tuesday. It has lost 5.73 per cent of its value since August 4, when it closed at 506/$1.
The naira dipped to 730 against the British pound sterling at the parallel market from 727/£1 on Tuesday, while the euro rose to N629 from N626.
At the I&E window, the naira weakened by 0.20 per cent to 411.50/$1 on Wednesday, according to FMDQ Group.
No less than 55 per cent to 60 per cent of Nigerian forex transactions are traded at this window, which is used by the Central Bank of Nigeria and most exporters and investors, according to Financial Derivatives Company Limited.
It serves as not only a source of price discovery but also a barometer for measuring potential and actual CBN intervention in the market. Some of the exchange rate determinants are balance of payments, capital inflows and trade balance,” the FDC said.
The country’s forex reserves, which have risen consistently since August 25, have gained over $1bn in 13 days, according to data from the CBN.
The reserves, which fell to a record low of $33.09bn on July 12, jumped to $34.49bn as of September 6, the highest level since May 14, the data show.
The naira had strengthened to 506/$1 on August 4 after plunging to 525/$1 at the parallel market on July 28, a day after the CBN stopped foreign exchange sales to Bureaux de Change.
The CBN Governor, Mr Godwin Emefiele, had on July 27, at the end of the Monetary Policy Committee meeting, announced the stoppage of forex sale to the BDCs, saying they had turned themselves into “agents that facilitate graft and corrupt activities of people who seek illicit fund flow and money laundering in Nigeria.”