$1=N155 at black market in Lagos

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DAILY TRUST

$1=N155 at black market

 

Written by Kayode Ekundayo, Lagos   
Wednesday, 31 December 2008

 

Stock Market

The American dollar exchanged for N150 at the black market in Lagos yesterday following the closure of the foreign exchange market to the banks and Bureaux de Change (BDC) by the Central Bank of Nigeria (CBN) for the Christmas and New Year holidays.

 

As a result, activities in the parallel market (black market) increased as many desperate buyers besieged the black market while operators also cashed in on the holiday to make money.

At the black market on Lagos Island on Tuesday, the naira was exchanged at N150 to a dollar, while other major currencies also appreciated against the naira.

At some of the parallel markets at Agege, Lagos Island, Murtala Mohammed Airport and Lagos Aiport Hotel Ikeja, the exchange rates of the naira to the major currencies were driven by high demands by people traveling outside the country.

According to the operators, who spoke on condition of anonymity, both individuals and banks now contacted the

black markets for their foreign exchange supplies. They said the closure of the foreign exchange market by the Central Bank of Nigeria (CBN) increased the pressure, adding that dollar scarcity has hit the market.

One of the dealers at Oke Koto, Agege, who identified himself as Yakubu Adele, said majority of those who patronised him in the early hours of yesterday were travelers who could not get foreign currency from the banks.

CBN announced the closure of the foreign exchange market on December 17, 2008. In two separate circulars to the banks and BDCs, the apex bank said that there will not be auction at the market during the holiday.

In circulars with reference numbers TED/FEM/FPC/GEN/01/134 and TED/FEM/FPC/GEN/01/135, addressed to authorized dealers at both interbank market and BDCs, CBN said that the markets will close from December 22, 2008 to January 4, 2009, adding that auctions will resume on Januray 5, 2009.

As at December 22, 2008, the naira exchanged for N130 to a dollar at the official rate while it depreciated further to N139.55 to a dollar after the closure of the CBN foreign exchange window.

This was against the N116.5 to a dollar that the naira was exchanged for in November, 2008.

Meanwhile one of the dealers at the CBN foreign exchange window, who spoke on condition of anonymity said that they decided to leave the market closed pending the resumption of auction by the CBN so as not to cause further slide in the value of the naira.

“We don’t want to push the rate further down, that is why we decided to close the market until the central bank returns to the market next year,” he said.

Some bankers predicted that the naira could depreciate to about 159 per dollar before the end of the year. Prior to the closure of the market, the regulator had sold about $4.72 billion since December 4, to stabilise the naira at its daily intervention in the foreign exchange market.

The apex bank, through its Monetary Policy Committee (MPC), promised to be intervening in the money market activities on daily basis to save the naira from further depreciation.

Last Updated ( Wednesday, 31 December 2008 )

 

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