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The Nigerian naira plunged further to a new record low on Wednesday, down 1.76 percent against the dollar on the parallel market as dollar supplies dry up.
The local currency fell to 460 to the dollar on the black market, down from 452 at the close of trading on Tuesday.
Though the naira closed at 305.50 to the dollar on the official interbank market against 305 a dollar the previous day, traders said dollar liquidity remains a major challenge in the market.
“Trading has continued to be thin on the interbank market as the dollar shortage persists while demand for the greenback remains strong,” one dealer said.
UPDATE
As Naira came under fresh pressures in the parallel market Wednesday, the Central Bank of Nigeria, CBN, issued more directives restricting usage of domiciliary accounts by bank customers, apparently to stem the pressures and improve official supply of foreign exchange to the interbank market.
As a result of the pressure, Naira crashed to between N460 and N465/ USD1, against the opening rate of N445/USD1 in the parallel market segment, though the interbank rate depreciated just marginally to N312.9/ USD1, against N310 earlier in the week.
Currency dealers at both segments of the market attributed the renewed pressure on rates to a worsening supply gap at all the segments, even as CBN’s intervention, according to them, has become too thin to assuage the huge demand.
One of the dealers in a commercial bank said: “CBN may have started finding it difficult to intervene with significant supply of foreign currency to the interbank market.
“On the other hand we have been having increased demand from our customers but we are unable to source their requirements for some weeks now.”
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Against the backdrop of the huge supply and demand gap, CBN appeared to have renewed its restriction measures on access and usage of independent foreign exchange resources.
Yesterday, some bank customers said they had received messages from their banks warning them to desist from using foreign exchange inflows in their domiciliary accounts for trading purposes.
The directives, according to a source in a bank, came against the emergence of a thriving currency trade by some individuals with their domiciliary accounts.
An e-mail from one of the banks stated that CBN had mandated that all customers of financial institutions were expected to utilize their accounts within regulatory guidelines.
According to the e-mail, the guidelines stated: “All customers of financial institutions are expected to only use their accounts for their direct personal/company related transactions.
“No customer of any financial institution is permitted to engage in any activity that could be perceived as international money remittance service (IMTO) or bureau de change (BDC) activities without the express approval of the CBN.
“Any customer who fails to adhere to these guidelines runs the risk of being reported not only to the CBN but subsequently to the security agencies.’’
The bank, in the same e-mail, encouraged customers to be mindful of these directives when using their bank accounts, adding that it would continue to provide updates regarding the proper use of domiciliary bank accounts.
