Naira on Tuesday gained significantly, about five percent, at the parallel market as speculators who had stockpiled dollars to hedge against political risk because of the presidential election sold off their holdings.
After trading on Tuesday, the local currency closed at N190/$ in some parts of Lagos compared to N200/$ at the parallel market.
At the inter-bank market, naira traded at N199.17/$ on Tuesday as against N199.15 Thursday last week, about N0.02 change in value.
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Naira on Tuesday closed at N202/$ at the bureau de change (BDC) from N200/$ traded the previous day.
Meanwhile, Godwin Emefiele, the governor of the Central Bank of Nigeria (CBN) has described the parallel market of the foreign exchange as a shallow and very insignificant market that deals with transactions that are not documented.
At the last Monetary Policy Committee meeting on March 23 and 24, 2015, the committee took note of the administrative measures implemented by the bank since the last meeting of the MPC to achieve stability in the foreign exchange market.
The committee enjoined the CBN to continue to fine-tune demand management measures as well as implement appropriate supply-enhancing strategies to ensure effective demand and utilisation of foreign exchange in the country.
However, Ayodeji Ebo, head, investment and research, and his team of analysts at Afrinvest Securities Limited expect the exchange rate to stabilise at an average of N200.00/US$1.00 at the inter-bank market as electioneering wraps up on the back of a successful and peaceful transition in government.
According to them, the depleting rate of the Nigerian external reserves (currently at US$29.8 billion and dipped 13.6% YTD) may taper as “we expect increased foreign portfolio in the near term. The eventual stop of the revenue leakages in the oil & gas space before the end of the year would increase the accretion of the external reserves.”
The lag effect of the depreciation/devaluation of the naira will continue to take its toll on the Nigeria’s headline inflation rate. “We retain our average inflation rate of 9.5% for 2015