Naira official rate falls 1,531/$ below street value
Maureen Aguta
Nigeria’s naira dropped to a record low against the dollar on the official market on Tuesday, FMDQ Exchange data showed on Wednesday, slipping below rates on the unofficial parallel market in intra-day trades.
The naira fell as low as 1,531 to the dollar during trading on Tuesday, FMDQ data showed, compared with N1, 460 quoted on the parallel market. The currency later closed at N1,482.57 on the official market, according to FMDQ.
The latest fall occurred after market regulator FMDQ OTC Securities Exchange said its methodology for calculating closing rates on the currency was revised last Friday to include more data, and that the levels on its computation had changed.
The naira has lost around 40 per cent since the start of the year. Its official exchange rate has been drifting towards the parallel market level as foreign currency shortages in the West African nation funnel demand to unofficial sources.
The Central Bank of Nigeria has warned lenders about underreporting transactions on the financial market, leading to misinformation, attempts to create price distortions and market manipulation, and said such activity would be sanctioned.
On Wednesday the currency eased on the forwards market, with traders quoting the dollar as low as 1,650 in a year’s time.
The naira plunged further at the official window on Tuesday, closing at an all-time-low of N1,482 against the United States dollar.
The local unit had closed at 1,348 against the greenback on Monday after the FMDQ Security Exchange review the methodology used for the calculation of its rates.
This came as the Central Bank of Nigeria released a circular to authorised dealers on financial market price transparency, warning them against engaging in sharp practices.
The bank stated that its attention had been drawn to the practice of some dealers and their customers in reporting inaccurate and misleading information on transitions in the financial market.
It stated that the behaviour was not compliant with ethical standards… “and deliberate attempts to create price distortions by reporting false transaction details amounts to market manipulation which will not be tolerated and henceforth face sanctions.”