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Naira Closes 485 Wednesday Following Dollar Scarcity

The naira has been under persistent pressure both at the official and parallel foreign exchange markets owing to the acute shortage of the United States currency

The naira closed flat at 485 against the United States dollar at the parallel market on Wednesday, three trading days after the local currency fell against the greenback to the current level.

Currency and economic experts said unless the supply problem at the forex market was abated, the volatility in the forex market would continue.

 “The challenge at the forex market is still supply; price is determined by the interplay of demand and supply,” currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.

The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the Federal Government needed to access an emergency lifeline to the tune of at least $10bn to stabilise the exchange rate and restore investor confidence to the market.

Economic and financial experts expect the naira to weaken further against the US currency in coming weeks as the Christmas celebration draws close.

They argued that the crackdown on the parallel market currency traders and the persistent scarcity of the greenback would make further weakening of the local currency inevitable.

Reuters had reported that foreign exchange demand by small businesses was set to surge ahead of holiday season sales.

Last week, the naira fell by 2.08 per cent week-on-week to 480, compared to 470/dollar the previous week.

The naira has, however, consistently closed around 305.5 a dollar level since August via the official window.

“The consistent clampdown on black market operators by security agents has driven some currency retailers underground, putting more pressure on available hard currency,” one dealer said.

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