Naira Plunges to All-Time Low, Sells at N409 to Dollar

As the fallout of this week’s ban of banks from foreign exchange transactions continued yester­day, the Naira was quoted at an all-time low of 409 to the dollar on the parallel market.

This compared with N402 per dollar the previous day, after the suspension of the banks from forex trading made dol­lars even harder to obtain.

The Central Bank of Nigeria (CBN) suspended nine commercial banks from forex transactions on Tuesday for fail­ing to pay money owed to the govern­ment – although UBA was readmitted after making a payment.

Shares in some of the banks hit dropped by up to 7.8 percent.

Traders said the currency fell due to the impact of the suspensions, com­pounding the dollar shortages Nigeria has been suffering due to the slump in the price of its oil exports.

“The suspension of some banks from transaction in the forex market has re­ally increased pressure on the market,” said Aminu Gwadabe, President of the Bureaux de Change Association.

According to Reuters, bank execu­tives have been meeting central bank officials to resolve the forex issue as in­vestors continued to dump their shares second day.

Skye Bank fell the most of those sus­pended from foreign exchange transac­tions, shedding 7.81 percent, followed by Fidelity Bank down 3.0 percent. FBN Holdings shed 1.9 percent while Dia­mond Bank and FCMB were down 0.8 percent.

The falls pulled the main index down 1.8 percent, Reuters reported.

On the interbank market, the curren­cy gained 0.2 percent to close at 305 Nai­ra to the greenback with traders attribut­ing the rise to central bank dollar sale to prop up the unit. The bank has been sell­ing dollars almost daily to boost liquidity.

However, currency forwards put the Naira at 344.50 to the dollar in one months’ time.

In June, the central bank abandoned its currency peg to the dollar, allowing the naira to weaken by 40 percent in a bid to attract more foreign investment.

But so far trading in the official for­eign exchange market has been limited as those with dollars prefer to sell them for a higher rate on the black market.