Naira firmed sharply on the parallel market yesterday, as retail currency traders tried to adjust to the reality of no devaluation by the government.
The naira firmed to between N302 and N310, a 20.5 per cent gain from Tuesday’s close of N364 to the dollar. The official interbank rate closed at N197.50, where the Central Bank of Nigeria, CBN, curbs introduced late last year to defend a currency peg have restricted access to dollars. That has funnelled demand for dollars on to the parallel market, a flow further fuelled by speculation of a possible weakening of the peg.
On Saturday, President Muhammadu Buhari rejected the idea of devaluing the currency, despite mounting pressure from an economic crisis caused by a sharp fall in the price of oil. The parallel market naira had risen on Monday and Tuesday, and its gains gathered pace on Wednesday. “The market is reacting to the president’s ‘no devaluation’ stance,” said Aminu Gwadabe, the head of the association of Nigeria’s bureaux de change operators. Read more