Naira hits all time-low at 334.50/dollar

The naira fell against the dollar at the interbank foreign exchange market to an all-time low of 334.50 on Wednesday, a day after the Central Bank of Nigeria’s Monetary Policy Committee hiked interest rates to lure foreign investors back into local assets.

The naira had closed at 310 against the interbank market on Tuesday.

About $10m was traded at the new record low, Reuters reported.

Foreign exchange traders said investors were pushing the currency lower to test the limit of how far it could fall, given a spread of almost 12 per cent between the official and black market naira rates.

“If we have more people trying to buy the naira then it should strengthen. I think we will keep seeing the trickles … I don’t think we will see large inflows until the fundamentals of the economy improves,” one trader told Reuters.

Economic analysts said the fall in the value of the naira against the dollar at the interbank market had nothing to do with the increase in the Monetary Policy Rate.

A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said the exchange rate was reacting to the interplay of demand and supply at the interbank market.

He said, “This is what the interbank forex market really wants, that is, a situation where only the forces of demand and supply will determine price. So far, the CBN has not intervened this week. The rate at the interbank market today has nothing to do with the increase in the MPR.