Naira drops to 224 as dollar demand rises

The naira dropped against the dollar at the parallel market on Tuesday driven by demand mainly from individuals travelling abroad for summer holidays and importers, traders said.

The local currency was quoted at 224 to the greenback at the black market, 0.89 per cent weaker than 222 it was sold on Monday, Reuters reported.

At the official interbank market, the naira closed at 197, a level it has been stuck at following the Central Bank of Nigeria’s peg on the exchange rate in February.

“We’ve seen a surge in dollar demand … since Friday,” a Nigerian Bureaux de Change operator, Harrison Owoh, said, adding that the CBN might sell dollars this week.

Owoh said the bank sold around $160m to BDCs last week to increase dollar supply.

BDCs are allowed to sell up to $4,000 as personal travelling allowance and $5,000 as business travelling allowance.

However, individuals sometimes buy above the stipulated dollar limit from the undocumented parallel market.

The naira had appreciated to 216 at the parallel market last week after banks stopped accepting hard currency cash deposits on CBN orders, fuelling excess dollar liquidity at the parallel market.

The central bank has also directed lenders to pay for dollars purchased at the official market 48 hours in advance, tightening naira liquidity.

 http://www.punchng.com/business/money/naira-drops-to-224-as-dollar-demand-rises/