Naira Continues Downward Slide as FX Demand Surges

The naira has continued to depreciate against foreign currencies especially the United States dollar in the foreign exchange market due to insufficient dollar supply to meet increasing demands.

The recent increase in demand, according to financial experts, cannot  be unconnected to the decision by Dangote Refinery to stop sale of petroleum products in naira.

Experts argued that Dangote’s decision may fuel increase in demand for FX with potential to increase the rate in official and parallel markets.

Speaking against the backdrop of the depreciation of the local currency and increase in the demand for dollar, they warned that the rising demand coupled with low dollar supply in the market poses risk to the stability of the naira.

Lagosbusinessnews.ng  learnt that the naira continued it’s free fall yesterday as it exchanged for N1,540.57/$1 at the official market.

The Central Bank of Nigeria (CBN) had sustained its intervention in the foreign exchange market with a view to keep the local currency stable at the current N1,500 range.

Our correspondent reports that the exchange rate depreciated by N18.95 last week, closing the week at N1,536.89 at the official market.

However, the market opened the week yesterday with the dollar exchanging for N1,540.57 fuelled largely by rising demand pressure in the market.

The CBN sold $92.10 million as the week ran down, bringing the total FX sales to $230.90 million amidst external reserves fluctuation.

At the unconventional black market in Lagos, the dollar was bought at N1,560 yesterday and sold for N1,570.

For instance, the recent decision by Dangote Refinery to stop sale of products in naira may fuel the demand with potential to increase the rate.

Already, importation of the petroleum products has become the order of the day with marketers now scrambling for the little amount of dollars in the market to meet their obligations.

An economist, Dr. Marcel Okeke in a chat with our correspondent said the recent announcement by Dangote Refinery is an ill-wind for the foreign exchange market.

He said by the time the marketers begin to scramble for foreign exchange to buy petroleum products from the refinery or from outside the country, the forex demand would increase thereby leading to an increase in the exchange rates.