Naira crashes to all time low of 350/ USD

The sharp and steady depreciation of the Naira at the inter-bank
foreign exchange market in the last one week has forced the Central
Bank of Nigeria, CBN, to intervene yesterday to stem the slide.


The apex bank was said to have offered about USD5.0 million each to
dealers amidst scarcity of foreign currency which had persisted since
last week Friday following the sudden withdrawal of CBN's
interventionist resources.

Dealers said the supply from the apex bank saved the Naira from
crashing to N350/ USD1 yesterday as the rate was already gone beyond
N330 as at mid day before the apex bank's intervention which relieved
the pressure and forced the rate down to less than N310.

But the intervention could not save the Naira from further
depreciation at the parallel market segment where it traded for N380/
USD as against N375 it closed on Thursday, a development which the
dealers said was connected to a perceived pressure on external
reserves and CBN's capacity to continue to be the only supplier in the
market.

The local currency has been on a downward spiral since the CBN
eventually took away the currency price ceiling it had subtly placed
after it officially floated the currency mid last month.

The depreciation in the Naira is also mainly attributed to the lack of
supply from CBN following reports that the apex bank had reduced its
forex allocations to sales in the interbank market due to other
pressing needs for the foreign exchange resources amidst dwindling
dollar revenue from oil sales.

Before now, s upplies other than the CBN had avoided the inter-bank
forex market over complaints that the official rates did not represent
the true value of the Naira against the dollar, hence they find their
way to push their dollars to the parallel market segments.

According to some dealers international oil firms who are major
independent suppliers of forex are now selling part of their hard
currency directly to petrol importers under an arrangement with the
government. They, however, explained that they are still looking at
what will be a comfortable exchange rate for sellers to come back to
the market and that is why the rates kept going up in the past one
week.

Last week CBN governor, Godwin Emefiele, flew to Britain and the
United States to try to lure back investors into Nigeria's financial
market after nearly one year they left due to CBN's exchange rate
control policy.

Vanguard learnt the trip was unsuccessful as the investors told the
CBN team that the market was not yet transparent enough adding that
the external reserves level was also uncomforting for them.

-Vanguard