Naira in free fall, loses another 450k
Written by Babajide Komolafe
Friday, January 9, 2009
IT was free fall for the Naira in the inter-bank and parallel markets yesterday, losing N4.50 as the Central Bank (CBN) suspended further sales of forex.



At the inter-bank foreign exchange market, the Naira lost N4 as N144.25 exchanged for one dollar as against N140.25 on Wednesday. Also at the parallel market, the Naira lost N5 as N147 exchanged for one dollar as against N142 the previous day. Consequently, the Naira lost an average of N4.5 in both segments of the market.

Already, the Naira has lost about N7 in both markets this week while it has lost N7.5 at the official market.

Meanwhile, there are strong indications that the official rate might hit N148 per dollar by Monday, as against N139.02 on Wednesday.

Market operators explained that the free fall was prompted by the depreciation of the Naira in the official market by N3.4, and the increasing scarcity of foreign exchange in the market.

The scarcity was aggravated yesterday as the CBN again suspended forex sales to banks and BDCs.

As at 5.pm yesterday, bank treasurers told Vanguard that the apex bank was yet to respond to their bid, an indication that it might not be selling foreign exchange to them.

Also, Bureaux de Change (BDCs) are hoping the apex bank would sell foreign exchange to them today. A BDC operator confirmed to Vanguard that the CBN told them to deposit money yesterday for foreign exchange bid, and that they would get dollars today.

But Vanguard was reliably informed that the CBN would not sell foreign exchange to the BDCs till next week, a situation that will worsened the declining fortunes of the Naira.

Meanwhile, sources close to the apex bank said by Monday, the official exchange rate might have increased to N148 per dollar.

The Naira has lost N7.75 in the official market since Monday when the CBN resumed foreign exchange sales this year. This translates to 5.7 per cent depreciation. On Monday, the naira lost N4.35 as the exchange rate rose from N131.27 to N135.62.

Last year, the Naira suffered 14.6 per cent depreciation on the average across the three segments of the market, while foreign exchange purchased by banks under the WDAS rose sharply by 26 per cent.