CBN unconcerned over naira slide in parallel market

The Central Bank of Nigeria (CBN) has stated that it would not be focusing on the thinly-traded parallel market when determining the exchange rate, despite the naira hitting record low on the unofficial market since last week.

 According to the apex bank’s spokesman, Ibrahim Muazu, “There is need to deemphasize the parallel market. How can less than one per cent be determinant of the rate? Most of those going that way are those that don’t want to be documented.”

 The nation’s currency yesterday exchanged at all low of N235 to the dollar on the parallel market, losing N1.50 from the previous day.

 Forex dealers attributed the recent fall in the value of the naira to the persistent shortage of dollar in the country and CBN’s restriction of importers of 41 items from access forex from the interbank market, which has forced them to seek their dollar demands from the black market.

 The central bank, worried about rising inflation, has said it is in no mood to devalue the naira again, after it tightened access to hard currency for the import of a wide range of goods.

 Since the measures, the naira has weakened steadily on the black market.

 Analysts say the measures risked diverting dollar demand to the black market, worsening investor perceptions about policy in Africa’s biggest economy and delaying a decision to devalue the naira to fully reflect weak prices for Nigeria’s oil exports.

 Aminu Gwadabe, president of Nigeria’s Bureau de Change association told Reuters that people were buying dollars on the parallel market to protect themselves against further naira weakness.

 On the interbank market, the naira traded at 199.45 at 1210 GMT on

 Thursday, near central bank’s pegged rate of 196.95. Investors questioned how long the bank’s rate could hold there, when the currency was trading further and further away on the parallel market.