Naira hits 497 as demand for USD plunges

Nigeria Naira fell to 497 against the United States currency at the parallel market on Friday as dollar shortages continued to hit the market.

Economic and currency experts have predicted that the naira will likely depreciate to over 500 per dollar this year.

The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, told Reuters that the he expected dollar supplies to the BDCs to resume next week.

Traders said the BDCs had not received dollars from international money transfer agents this year, worsening forex liquidity in the market.

The BDC operators had on Tuesday set their quotes for dollar purchases at 399 for next week.

The retail currency traders said the Central Bank of Nigeria had approved N399 per dollar for retail trades next week, ABCON said in an internal memo seen by Reuters.

The Federal Government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate, currently at 305 to the dollar, and the unapproved open retail market rate, which hit 497 on Friday.

However, money markets were awash with naira liquidity on Friday, pushing overnight lending rates 2.5 percentage points down to seven per cent.

The ABCON said the naira reference rate was meant to improve liquidity and help rebuild investors’ confidence.

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