Naira falls by 98K despite CBN’s U.S.$500 million

The Naira depreciated by 98 kobo at the interbank foreign exchange market and by one kobo at the official market in spite of $500 million sale by Central Bank of Nigeria.

From N160.8125 per dollar, the exchange rate of the naira rose to N161.8 per dollar in the interbank market, while the official exchange rate closed at N155.76 per dollar from N155.75 last week.

In a bid to save the naira, CBN, at the bi-weekly foreign exchange auction conducted yesterday, increased foreign exchange sale to $500 million from $300 million. This represents 40 percent increase.

A senior foreign exchange dealer, who spoke on condition of anonymity, attributed the depreciation of the naira to huge foreign exchange demand in the system.

This, he said, was due to exit of foreign investors from the nation’s bond market, which led to increased demand for foreign exchange as the foreign investors seek to repatriate their money.

Managing Director/Chief Executive, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said: ‘There are three pressures here. There are those who have transactions to settle, there are those who are afraid that the dollar would not be available when they need it in the future, and there are the speculators.’