Naira suffers another setback as external reserves drop

Naira suffered another setback across forex markets, falling by N1 to N476 at the parallel market as against the N475 it exchanged for the Dollar on Tuesday.

Meanwhile, on the spot market also called the Investors and Exporters (I&E) forex window, naira depreciated by 67 kobo or 0.17%, changing hands at N394.67 to a dollar. That leaves the gap between the exchange rates of the two markets at N81.33 or 20.61%.

Yet, traders have been thronging the parallel market where Dollar is much more expensive because the quantity available at the spot market is grossly inadequate to meet their demand. Naira had closed at N394 at the Tuesday session.

Turnover at the I&E forex window rose by 78.7% to $200.34 million from $112.08 million.

Naira reached an intraday low of N407.68 to a dollar and hit a high of N388 before closing at N394.67.

Last week, the average daily forex sale was around $169.93 million, signaling a significant rise from the $34.5 million reported in the week before. However, the apex bank’s interventions in the market have failed to stop naira from weakening.

Nigeria’s external reserves had fallen by $838 million or 2.35% to $34.851 billion in the six weeks to 14th December, weakening the central bank’s ability to intervene in the foreign exchange market.

On Tuesday, the Nigerian government got approval for a $1.5 billion loan facility from the World Bank, which is anticipated to shore up the country’s fast depleting foreign exchange reserves.