Naira crashes again, goes for N502/$1 on parallel market

The naira on Friday exchanged at N502 to one dollar on the parallel market due to what finance experts termed pressure from panic buyers on the local currency.

The naira lost N3/$1 when compared with N499 to dollar it closed on Thursday.

Managing Director/CEO Financial Derivatives Company Limited, Bismarck Rewane, said the naira was weakening because of panic buying by forex users, speculative trading and front loading of future demand.

He said, “Our economic analysis based on the cobweb theorem of prices (exchange rate) moving towards an equilibrium says that prices will rise initially when there is a demand gap before falling in the short run.

“Therefore, we expect the forex market to correct itself in July with the naira appreciating towards N470-N490/$.”

The naira has been under pressure after its recent devaluation by the Central Bank of Nigeria that pegged the official exchange rate at N410.25/$.

Many forex dealers expressed shock at the pace the naira was losing ground against the dollar despite rise in crude oil prices.

Trading Desk Manager, AZA, a global forex trading platform, Murega Mungai, told investors that the market had continued to digest the impact of the CBN adopting the NAFEX as its official exchange rate.

He said that foreign reserves also declined slightly to $34.24bn, repressing a 0.04 per cent decrease compared to the previous week figure.

Mungai said the recent rise in global crude oil prices had not fed through into increased revenue from oil exports while projecting sustained pressure on the naira in the coming days.

President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said forex speculators were behind the naira fall.

He said directors of Bureaux De Change (BDCs) had met and resolved that all BDCs should cooperate to bring down the forex rates in the market.