Naira depreciates further to N385/$ in parallel market

By Babajide Komolafe

LAGOS — The naira, yesterday, depreciated
further to N385 per dollar in the parallel market
as demand for foreign exchange intensified.
This implies the naira has depreciated by N60
against the dollar this week in the parallel
market, when compared with the closing
exchange rate of N325 per dollar last Friday.
The currency, however, remained stable at the
official interbank foreign exchange market as the
interbank rate closed N199.34, yesterday.
Thus, the gap between the interbank and parallel
market rates widened to N185.66 per dollar from
N127.53 last Friday.
Vanguard investigation also reveals that the naira
depreciated against the British pounds to N505
per pounds in the parallel market, yesterday,
implying N65 depreciation when compared with
the closing rate of N440 last Friday.
Investigations revealed that the sharp
depreciation of the naira in the parallel market
this week is driven by increasing demand by
importers sourcing dollars to pay for imports
from China.
According to a BDC operator, who spoke on
condition of anonymity, “you know China had
been on its one month annual holidays. But they
resumed work on Monday, and people have to
complete payment for goods ordered before the
holidays.
"They had made 30 per cent down payment to
order the goods and they now have to pay the
70 per cent balance otherwise they will lose the
30 per cent. That is why they are desperate and
ready to buy dollars at any rate. Meanwhile,
supply is scarce and those who have dollars are
not willing to sell because they might also need
the currency soon.”
The naira has been on steady decline since
Tuesday, January 12, 2016, when the Central
Bank of Nigeria (CBN) stopped weekly dollar
sale to BDCs. Prior to this action, the naira
traded at N265 per dollar in the parallel market.
Consequently, the naira has depreciated by N80
in the parallel market since the CBN took the
action.
The steady depreciation was also aggravated by
inability of the CBN to meet foreign exchange
demand. Vanguard investigations reveal that the
parallel market is being bedevilled with demand
for foreign exchange from importers of the 41
items excluded from the official market by CBN
last year as well as importers of items not
excluded from the official market.