Naira Currency inches closer to N400/Dollar mark as forex issues remain

The Naira is gradually dropping further and further to the N400/Dollar threshold as limited dollar supply continues and foreign investors remain reluctant to dig into the Nigerian economy.

On Monday, August 1, 2016, the Naira dropped to N382/Dollar on the parallel market, down about N2 from N380 it traded at last Friday.

play Nigeria's central bank governor Godwin Emefiele speaks during the monthly Monetary Policy Committee meeting in Abuja, Nigeria January 26, 2016. (REUTERS/Afolabi Sotunde/File Photo)

Forex traders blamed the plummeting local currency on the Central Bank of Nigeria (CBN) currency controls which in turn affected the inadequate amount of forex on the interbank market.

Analysts already predict that the Naira could drop as  low as N400/Dollar this week as foreign investors remain skeptical and the federal government confirmed that Nigeria is 'technically' in a recession.

The CBN has already been making interventions in the interbank market but that has cut back the potential the its free float policy could have on the forex market.

play CBN Building
(Daily Independent)

“The market still lacks enough liquidity, we need to do more to boost liquidity. The current rate is a measure of the amount of dollar liquidity at the interbank market,” said Mr. Kunle Ezun, a currency analyst at Ecobank Nigeria.

There is still no telling whether the forex market will get any better without the influx of much-needed forex into the market, and the country.