Naira gains N10 to exchange at N350/$

Naira, Monday appreciated by N10 to exchange at N350 to dollar in the parallel market. There was volatility in the parallel market exchange rate between Friday when it closed at N360 and the close of business yesterday.  Bureaux De Change operators who confirmed this development attributed the volatility to speculation.

Parallel market exchange rate rose to N360 per dollar on the average on Friday following rumours that the Central Bank of Nigeria (CBN) had devalued the naira to N290 per dollar. The apex bank however debunked this rumour leading to the appreciation of the Naira on Saturday to N350 to the dollar.

The appreciation was reversed in the early hours of yesterday prompting the parallel market exchange rate to rise to N355 per dollar by 12 noon before retreating to N350 by the close of business.

According to President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, the volatility was driven by speculation. “When people hear about any government policy they make interpretations and take position. The report on Sahara Reporters website triggered the depreciation on Friday but the denial by CBN however calmed the market. Today there is a report that the CBN will on May 24 make a pronouncement on its foreign exchange policy and this caused a sudden lull in trading hence the appreciation in the later part of today.”

Last week Thursday, the two month stability of the naira in the parallel market was shattered by the announcement of deregulation of importation of petroleum products. Under the new dispersion, fuel importers are allowed to source foreign exchange from secondary sources to import petrol.  While announcing the deregulation of petroleum importation, the Petroleum Products Pricing Regulatory Agency, PPPRA said that with the deregulation of petrol importation, importers will henceforth be permitted to source for their foreign exchange requirements from secondary sources.

This triggered increased speculation in the parallel market due to expectation that the new policy will increase demand for dollars in the market. Consequently, the parallel market exchange rate which had been stable at N320 per dollar since February rose sharply to N341 per dollar the day after the policy was announced.