A surge in demand for dollars in the parallel market driven by banks and end-users combined with slow forex disbursement to BDCs by the Central Bank of Nigeria, CBN, caused the Naira, last week, to fall by 23 per cent against the dollar, thus recording the worst weekly performance of the Naira since February.
Following the steps of the banks, some forex end-users, also bought dollars in the parallel market, deposit them in their domiciliary account and sell to the banks at the higher official rate. “The second factor is that we have seen the resurgence of Person-to-Person, P2P, where hedging, margin trading is taking place.
On the outlook for the Naira in the coming weeks, Nnamdi said: “A lot depends on if the CBN continues to intervene in the market to ensure that they don’t lose control of the market. And also if we start to see renewed FPI flows.”In a bid to arrest the depreciation of the Naira, CBN intervened in the official market on Friday.
“But we received hint that the CBN’s task force was arresting many black market traders. This led to the appreciation of the naira because we just wanted to quickly sell what we had and wait till tomorrow to see what the market holds.