Naira slumps further as dollar shortages persist

NIGERIA’S naira was stuck at a record closing low of N292.90 to the dollar on Wednesday after just one transaction with the supply of dollars drying up and no intervention by the Central Bank of Nigeria (CBN), traders said.
It held on to Tuesday’s close after one transaction worth $380,000 was made on Wednesday at 11.50 GMT, more than three hours after the market opened. The interbank market had seen just $300,000 traded on Tuesday, again in one transaction. Traders had expected the CBN to intervene to ease dollar shortages, but that did not materialise as commercial banks were quoting to trade the dollar as low as N295.50 on Wednesday. “Recent forex reforms have been enough to re-open the investment case for Nigeria but there is still some uncertainty about the functioning of the market,” Alan Cameron, economist at Exotix said. “The absence of volatility at N283/$ was interpreted as a sign that administrative controls were still in place; it remains to be seen if those will be fully removed.”
Banks had been quoting the dollar at N281 to N285 after the CBN lifted its 16-month old peg of N197 to the
dollar last month. But the lack of liquidity has curbed activity, leaving the apex bank as the main supplier of foreign
currencies.- THE SUN