Naira drops to 313.5 against the dollar in the parallel market

The naira dropped further to 313.5 against the United States dollar at the parallel market on Tuesday as shortage of foreign exchange, especially the greenback, persists in the forex markets.

The local currency had traded for 310 to a dollar on Monday.

On Tuesday, the naira closed at 199.40 to the dollar on the interbank market, according to Reuters, around the peg rate of 197 to the dollar.

This came just as the interbank lending rate rose to two per cent from one per cent on Monday, after the Central Bank of Nigeria had directed commercial banks to fund their naira accounts ahead of its intervention in the forex market on Thursday.

The overnight lending rates jumped by 100 basis points as the movement of naira cash for forex purchases drained liquidity in the financial market.

The CBN intervenes once a week at the interbank forex market to provide dollar liquidity for some eligible importers.

The naira had plummeted against the dollar last month after the CBN banned dollar sales to Bureau De Change outlets and later stopped daily sales to the interbank market.

The measures were aimed at conserving the nation’s external reserves, which have hit an 11-year low at $28bn.

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