By Oyetunji Abioye
The naira has recorded a major gain against the United States dollar at the parallel market as Christmas celebration weighs on the demand for the greenback across the foreign exchange markets.
The naira closed at 485/dollar on Friday evening, up from 495/dollar recorded earlier in the day.
The local currency, which was sold on the streets of Lagos and Abuja at 495/dollar on Thursday, had closed at 492/dollar on Wednesday.
On Monday and Tuesday, the naira traded flat at 490, after closing at 487/dollar the previous Friday.
The naira has been under severe and continuous pressure as the scarcity of the US currency continues to create ripples in the financial markets and economy.
Before falling to 487 the previous Friday, the local currency had consecutively closed flat at 485.
The global crash in the prices of crude oil, Nigeria’s main foreign exchange earner, has brought untold hardships on Nigerians.
Economic and financial experts said unless the lingering dollar supply problem abated, the volatility in the exchange rate and the consequent economic challenges might continue.
“The challenge with the forex market is still the supply issue; price (exchange rate) is determined by the interplay of demand and supply,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
Experts expect the naira to weaken further against the dollar as the Christmas holiday begins this week.
They also argued that the crackdown on the parallel market forex traders and the persistent scarcity of the greenback would make further weakening of the naira inevitable.
A few weeks ago, the naira closed flat at 470 against the greenback over a period of over a week.
The naira had plunged to 470, down from 455 on the back of a fresh dollar shortage at the official and parallel forex markets.
Dollar shortages have caused many companies to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices of oil, which accounts for over 70 per cent of Nigeria’s budget revenue.
The Central Bank of Nigeria has struggled to support the naira as the country’s external reserves continue to fall.
The naira was quoted at 310.5 to the dollar on the official interbank window on Thursday by commercial lenders.
Meanwhile, the currencies of Uganda, Kenya and Zambia are seen trading sideways in the week to Thursday as most investors closed positions ahead of the end of the year, according to Reuters.
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