Forex shortage: Naira hits all-time low of 410/dollar

A fresh pressure has come on the Naira exchange rate with the local currency depreciating to N410/ USD1, a whopping N8 loss in the parallel market as apprehension continued over the banning of some banks from the interbank foreign exchange market. The currency also dipped further at the interbank market closing at N316.8/ USD1 as against N315.9 the previous day.

The currency had lost N5 and N10.4 to the USDollar in the parallel and interbank market segments respectively a day after the ban was ordered by the Central Bank of Nigeria, CBN.

Banks’ forex dealers, however, told Vanguard that the renewed pressure on the Naira had more to do with scarcity than the ban placed on some banks.

But they also said that many dealers and buyers were speculating that the apex bank was showing some desperation in controlling access to foreign exchange and weakening its intervention with supply of foreign exchange to the market, a situation which drove negative sentiments in the market.

Parallel market dealers corroborated the scarcity concern when they told Vanguard that though they do not have demand pressure, the supply was also not coming in as the banks have not been fulfilling the directives of the CBN to sell to Bureau de Changes, BDCs.

They explained that the initial moderation in rates last week when CBN gave the directive had given way to further apprehension when the banks refused to comply fully.

But amidst these, CBN was able to settle the USD152.48 million of Naira futures contracts it sold two months ago which matured yesterday at an exchange rate of N279/ USD1.

The apex bank also executed a fresh 12-month contract at N241/USD1 which is scheduled to mature on August 16, 2017.

Bank executives have been meeting with CBN officials to resolve the forex issue with some of them indicating that the suspension would soon be lifted.

One of the affected banks, United Bank for Africa Plc, has already been lifted while executives of other banks are still meeting with the apex bank and the Nigerian National Petroleum Corporation, NNPC, as at yesterday to secure a settlement on the issues involved.

The other affected banks are First Bank of Nigeria Plc, FCMB Plc, Diamond Bank Plc, Skye Bank Plc, Heritage Bank Limited, Keystone Bank Limited, Fidelity Bank Plc and Sterling Bank Plc.

The apex bank suspended the banks from forex transactions on Tuesday for failing to remit money they received from NNPC into the Treasury Single Account, TSA.