Friday, May 12, 2023

Naira hits record low after central bank adjusts spot rate

The Nigerian naira hit a record low of 466 per dollar on the official market on Thursday, after the central bank weakened the currency on the spot market and at its foreign exchange auction as it tries to address a backlog of demand for foreign currency, traders said.

Nigeria's central bank has been adjusting rates to manage demand for foreign currency against its level of foreign reserves while at the same time intervening on the foreign exchange market to keep the currency stable after it has weakened.

The central bank adjusted rates on Wednesday to 465 naira from 460 naira per dollar, traders said, while it sold hard currency to businesses for raw materials and other imports at 630 naira at its last auction on Friday.

"Generally, the market impression is that (FX) rates are moving up," one currency trader said.

The naira, which trades within a range on the official market, has fallen to successive lows due to dollar scarcity, coupled with the central bank's adjustments to manage the backlog of demand for foreign exchange.

The currency later recovered some ground to trade at 463 naira per dollar on the official market on Thursday.

"At the current level, clients are not getting funds," the trader said. "The appetite is to seek more dollars to meet obligations."

The naira eased to 748 against the dollar on the black market as individuals and firms channel unmet currency demand to informal sources.

By Chijioke Ohuocha, Reuters

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