Naira drops to 218 as dollar demand rises

The Naira and dollar

The naira dropped on Monday by 2.3 per cent to 218 against the dollar at the parallel market. The greenback was sold for 213 at the black market on Friday.

Foreign exchange traders linked the development to huge demand for the dollar by importers, politicians and investors.

“There is an upsurge in demand for the dollar due to increase in liquidity in the system, with some buyers willing to pick up dollars at any available rate,” the President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, said,

The naira had last week hovered between 208-210 against the dollar.

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This came after the Central Bank of Nigeria increased dollar sales to the BDCs in a bid to narrow the margin between parallel and interbank market rates.

Some forex dealers said a number of people were buying up dollars to pay school fees and other commitments abroad, fuelling a surge in demand at the parallel market.

The naira, however closed at 197 to the dollar on the official interbank window on Monday. The naira has been hovering between 197 and 199 at the inter bank market since February, when the central bank introduced tight control in the official market.

However, Gwadabe observed that rumours of further depreciation of the naira and likely stoppage of the CBN window to the BDCs were also creating high speculation and artificial scarcity in the forex markets.