JUST IN: Apprehension as Naira Slumps to N940/$1 at P2P

By Adedapo Adesanya

The free-fall in the value of the Naira compared with the United States Dollar continued on Thursday morning in the Peer-to-Peer (P2P) window of the foreign exchange (FX) market.

According to feelers received by Business Post, the low supply of forex in the official channel, the Investors and Exporters (I&E) segment of the market, has forced those in need of FX to look at the alternative markets, the P2P and the parallel market, for their forex needs.

This is already putting pressure on the Naira, as FX traders in those spaces are taking advantage of the demand pressure to hike the price, further widening the premium in the Naira value in the official and other rates, which the government had earlier wanted to bridge.

Business Post gathered on Thursday morning that the local currency was traded at N940/$1 at the peer-to-peer compared with the N927/$1 it was sold on Wednesday, indicating that it has lost N13 against the US Dollar in less than 24 hours.

Also, at the black market this morning, the Naira lost N5 against the greenback to sell at N920/$1 compared with the N915/$1 it was transacted yesterday.

At the market on Wednesday, the domestic currency depreciated against its American counterpart by N24.87 or 3.28 per cent to sell at N782.38/$1 compared with the preceding day’s value of N757.51/$1,

In June, the Central Bank of Nigeria (CBN) liberalised the FX market and put control in the hands of market forces. This saw the official rate plunge 40 per cent, briefly aligning with the black market.

“All transactions will now be done through the Investors and Exporters (I&E) window, where the exchange rate will be determined by market forces. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks,” the bank said in a statement.

Even as the restrictions were lifted, markets needed to digest a heavy backlog of unmet requests, which further strained the currency.

Also, the CBN continues to tighten its control on a list of banned items; experts say the regime will go back to previous levels.

The bank said in a series of Q&A tweets in mid-June that even after the operational changes to the foreign exchange market, “The status quo remains on the 43 non-eligible items. The items are not permitted to be funded from the I&E window.”