Naira falls to record low

The naira closed at a new low on Thursday, falling 1.25 per cent despite the intervention of the Central Bank of Nigeria (CBN), which weakened the currency at its official foreign exchange window.

The central bank unexpectedly sold dollars at N158.41 at the window, having earlier auctioned the greenback at N156.59, unnerving dealers about the risk of a possible devaluation.

That left dollar orders unfilled from importers who had placed exchange rate limits on their transactions, boosting demand on the interbank market.

The naira closed at a new low of 176.10 to the dollar.

The fall in the currency accelerated the rate of sell-off in the stock market.  The Nigerian Stock Exchange (NSE) all share index dipped by  2.1 per cent on Thursday to close at 33,428.76 basis point, as foreign investors who have pulled out more than N670 billion in the first 10 months of the year continued to sell equities.

Dealers said the central bank stepped up interbank dollar sales, selling close to $250 million, which failed to quench demand for dollars, mostly from importers.

Nigeria imports around 80 per cent of what it consumes.

Foreign reserves dropped 2 per cent this month, as the CBN sold dollars to lenders to stem the naira’s slide.

“Expectations are rising that the bank will throw in the towel and hike policy rates given the seeming futility of trying to keep the naira from depreciating,” experts said.

The monetary policy committee (MPC) of the CBN, which fixes interest rate and takes decisions on other monetary policies, will meet on November 24 and 25 to discuss the development