Naira Weakens on Sudden Increase in Demand for Dollar

Kayode Sesan

Nigeria’s naira weakened against the dollar on the parallel market on Thursday as speculators took advantage of recent gains to mop up dollars, creating fresh scarcity.

The naira was quoted at 350 to the dollar on Thursday, weaker than its 300 per dollar close the previous day.

The naira remains flat around the 197.50 peg rate on the official interbank market, where the central bank introduced curbs last year on access to dollars as a sharp fall in the value of Nigeria’s oil exports triggered an economic and fiscal crisis.

The currency of Africa’s biggest economy rallied in the week to around 300 a dollar from a low of 400 a dollar after President Muhammadu Buhari on Saturday rejected the idea of devaluing the naira.

But the head of Nigeria’s association of bureau de change operators, Aminu Gwadabe, said “hoarding and speculative activities have returned to the market, pushing down the naira’s value again.”

Another currency trader, Adamu Abdulahi, said demand for the dollar suddenly jumped on Thursday, causing the naira to weaken.

“Many people have been asking to buy the dollar today while not many people are coming to sell to us,” Abdulahi said.

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