Naira Depreciates to N460/$ on Parallel Market

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The naira fell to N460 to the dollar on the parallel market wednesday, compared with the N455 to the dollar the previous day, due to reduced dollar supply in the market.

But on the interbank FX market, the spot rate of the naira closed at N306.78 to the dollar yesterday, supported by central bank interventions.

The naira had been relatively stable on the black market after the bank asked international money transfer firms to sell dollars directly to bureau de change operators to boost liquidity and narrow the gulf with the official market.

The directive was initially effective, traders said, but its impact has been limited due to few dollars coming into Nigeria.

“What we get from Travelex is not sufficient,” one trader told Reuters, referring to demand in the market.

International money transfer firm, Travelex, sells around $15,000 to 1,000 retail currency outlets weekly, but the amount is a fraction of what is required to cover demand from individuals and small businesses.

Dollar shortages have caused many firms to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices for oil, which accounts for 70 percent of Nigeria’s budget revenue.

The central bank has struggled to support the local currency as its dollar reserves have continued to fall.