Naira tumbles on black market, hits 420 per dollar
Posted by News Express | 31 August 2016 | 2,878 times
Nigeria’s naira was quoted at an all-time low of 420 to the dollar on the unofficial market on Wednesday.
This comes the same day Africa’s biggest economy officially slid into recession.
The currency traded at 418 to the dollar on Tuesday and has been under constant pressure on the black market for months.
The naira was quoted at 317.09 to the dollar on the interbank market by 1224 GMT, against a 305.5 close on Tuesday.
Dollar scarcity has gripped Nigeria’s official market for several months now.
The naira, which hit fresh record low since the central bank floated the currency on the official interbank market in June, first touched 400 on the black market this month.
The central bank has been selling dollars almost daily to boost liquidity and support the naira.
Nigeria, in June, ditched its 16-month-old peg of 197 naira to the dollar to lure back foreign investors who fled both the equities and bond markets in the wake of the plunge in crude prices.
Investors have welcomed the removal of currency controls but many are still steering clear until Africa’s biggest economy shows signs of a concrete recovery.
CBN has also been mopping up naira liquidity to shore up debt yields.
But the lack of dollar liquidity has curbed interbank activity, leaving the central bank as the main supplier of dollars.
Currency traders have continued to wait for offshore flows to return.
The Central Bank of Nigeria (CBN) on Tuesday issued license to 11 new International Money Transfer Operators (IMTOs).
The new entrants are joining Western Union, MoneyGram and Ria, which had been cleared by the CBN.
The new operators are Trans-Fast Remittance LLC; WorldRemit Limited, UAE Exchange Centre LLC; Wari Limited, Homesend S.C.R.L, Small World Financial Services Group Limited and Weblink International Limited. Others are Cash Pot Limited, DT&T Corporation Limited, Fiem Group LLC DBA Ping Express and CP Express Limited. According to the CBN, the new entrants were licensed as part of efforts to liberalise the Foreign Exchange Market, ensure liquidity and make foreign exchange more readily available to low end users.
Nigeria is battling severe forex shortages following a drastic reduction in its earnings from oil, which account for the bulk of source of the country’s foreign exchange. (TV360 Nigeria)