The Nigerian naira has continued to lose at the Forex market even after the intervention by the Central Bank of Nigeria.
Naira and dollar notes
The naira depreciated on Monday as it traded at 400 to the United States dollar, according to Reuters. This is coming two weeks after the Central Bank of Nigeria introduced the Investors FX Window.
The window was designed to allow investors, trade in the currency at market-determined rates, but it has been revealed that investors were demanding rates above N400/dollar while locals were quoting rates as low as N350/dollar.
As a result, traders held a conference call last Friday with market regulator FMDQ OTC Securities Exchange to discuss the wide range of quotes on the naira for investors, although the meeting did not produce any resolutions, according to Punch.
FMDQ provides daily opening and closing quotes on the naira. Traders, worried about illiquidity in the currency market despite making the exchange rate market-determined for investors, said no resolution was reached at the meeting.
“We have done deals around N400/dollar levels,” one trader said, adding that, “Some of the off-shores investors are insisting on N400/dollar.”
The CBN had in April said it would allow investors to trade the naira at market-determined rates, a move intended to improve the dollar supply and attract foreign investors who bolted from Nigeria at the start of the latest naira crisis.
The move introduced yet another exchange rate to the five existing ones. Still, analysts doubted it would be enough to draw more hard currency into the economy.
Investors have questioned the over-the-phone trading system for lack of price discovery and transparency.