Naira dips to N412 record low to dollar, as stocks fall continue under FX ban weight

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Nigeria’s currency, the Naira dipped to all-time low of N412 per dollar on the parallel market on Friday as a dollar shortage persists, traders said.

Traders attributed the development to the difficulty being experienced by some bureaux de change operators to access their forex account to get dollar supply after the central bank suspended nine commercial lenders from the market, putting further pressure on the local currency.

The Naira had on Thursday closed at N409 per dollar on the parallel market.

On the interbank market it traded at 315 compared with 305 the previous day.

Meanwhile, the Central Bank of Nigeria said on Friday it plans to offer 212.85 billion naira ($675 million) in Treasury bills maturing between 91-days and 1-year on August 31.

The bank said it will sell 45.85 billion naira worth of the 91-day bills, 62 billion naira of the 182-day paper and 105 billion naira of the 1-year debt.

Payment for the purchase will be effected on Thursday, the bank said in a public announcement.

Nigeria, Africa’s top crude producer, issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.

Traders said the local currency fell due to the impact of the suspensions, compounding the dollar shortages Nigeria has been suffering due to the slump in the price of its oil exports.

“The suspension of some banks from transaction in the forex market has really increased pressure on the market,” said Aminu Gwadabe, president of the bureaux de change association.

Bank executives have been meeting CBN’s officials to resolve the forex issue as investors continued to dump their shares second day.

Expectedly, Skye Bank fell the most of the banks suspended from foreign exchange transactions, shedding 7.81 percent, followed by Fidelity Bank stock value dipped by 3.0 percent. FBN Holdings shed 1.9 percent while Diamond Bank and FCMB were down 0.8 percent.

The falls pulled the market’s main index down 1.8 percent.

On the interbank market, the currency gained 0.2 percent to close at N305 to the greenback with traders attributing the rise to central bank dollar sale to prop up the unit. The bank has been selling dollars almost daily to boost liquidity.

However, currency forwards put the naira at 344.50 to the dollar in one months’ time.

On Thursday, the CBN settled $152.48 million of naira futures contracts it sold in June at an exchange rate of 279 naira per dollar, further draining its reserves, which is at its lowest in more than 11-years.

In June, the apex bank abandoned its currency peg to the dollar, allowing the naira to weaken by 40 percent in a bid to attract more foreign investment.

But so far trading in the official foreign exchange market has been limited as those with dollars prefer to sell them for a higher rate on the black market.

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