Nigeria’s currency naira plunged N3 to N370 against the United States dollar on Friday, August, 25, as dollar supply from the Central Bank of Nigeria (CBN) continued to decline.
The local currency, which used to hover between 360 and 365 to the greenback, has been trading between 367/dollar and 370/dollar in recent weeks, due to the huge demand for the dollar.
It is also understood that the country’s apex bank has been slowing down in its weekly sale of foreign exchange.
The Association of Bureau De Change Operators has said the CBN needed to converge the exchange rate in order to stabilise the naira.
Economic and financial experts have also called for the convergence of the exchange rate.
Meanwhile, the naira is expected to appreciate marginally both on the investors’ foreign exchange window and on the black market this week as dollar liquidity is seen rising on the back of offshore inflows.
The naira was quoted at 366.79 per dollar for investors, and traded at around 305.90/dollar on the official market window.
The CBN has been injecting the US currency into the market even as dollar liquidity swelled with rising investor interest in Nigerian assets.
The country’s overnight lending rate dropped to 12 per cent on Friday after spiking to almost 100 per cent on Wednesday due to a liquidity squeeze as lenders paid for hard currency and treasury bills purchased from the CBN.
Money market rates had moderated on Thursday after the Federal Government disbursed N224.54bn ($715.10m) in budget allocations to the three tiers of government, boosting liquidity, Reuters reported.