The value of the naira fell further on Thursday and now sells for N206 against one US dollar. This was despite an agreement reached on Wednesday by Nigerian currency dealers to stop trading if there is a more than 2 percent intraday slide in the naira over fear the naira could hit N200 to $1.
This is the sharpest fall of the week for a currency that sold for N194 when the week began.
THE WILL reports that the market had been volatile since the Central Bank of Nigeria (CBN), in a bid to stop speculative demands in the market, barred foreign exchange bureaus from buying dollars through commercial banks. Dealers now have to buy directly from the CBN’s own auctions.
CBN set a new trading range of N160-N176 against the dollar after the naira’s last devaluation but has struggled to maintain that range.
Salisu Garu, a foreign exchange bureau operator in Abuja was quoted as saying that the central bank’s aim is to limit people’s ability to trade naira for dollars while sentiment is against the Nigerian currency. He however added that making dollars harder to come by might even create more desperation to get it and devalue the naira even more.
Also, a Reuters report said liquidity conditions have deteriorated as the naira has slumped to record lows because dollar inflows from foreign investment and other sources have dried up.
The crash of the naira puts more pressure on President Goodluck Jonathan, who is seeking re-election in February.