Naira in free fall, records 9.5% at interbank market

The Nigerian Naira hit a record low of 330 per dollar at the regular interbank trading on Friday, falling 9.5 per cent as traders tested lower levels seeking to attract liquidity in the absence of Central Bank interventions.
However, the Naira fell to 298.50 per dollar on thin volumes as market opened and extended losses to trade a total volume of $26.97 million. The Naira on Thursday crossed 300 for the first time and hit 330.50 in off-market trades.
Traders were expecting the central bank to intervene to ease dollar shortages, which did not materialise.
The bank has not intervened for most of this week, they said. Instead it was mopping up Naira liquidity to support the currency.
“We are looking at what will be a comfortable rate for sellers to come back to the market,” one trader said, referring to foreign players.
“Most banks are quoting around 300 levels but liquidity is still thin. The Central Bank hasn’t participated this week,” he said.
“Last week the Central Bank governor flew to Britain and the United States to try to lure back investors. However, some investors said the Naira’s devaluation was not strong enough to erase the need for the parallel market, where those who still have dollars to sell go.
“The interbank market traded volumes of over $100 million a day before Central Bank pegged the rate”, the trader said.
Nigeria ditched its 16-month-old peg of N197 to the dollar last month. But the lack of liquidity has curbed activity, leaving the Central Bank as the main supplier of dollars. Other past suppliers of dollars, including oil firms, are now selling part of their hard currency directly to petrol importers under an arrangement with the government, traders said.
However, the Central Bank has been mopping up Naira liquidity through treasury bill issued at higher rates to attract offshore investors into bonds.
The apex bank on Thursday sold treasury bills at 16.48 per cent at a primary auction for the one-year note, up from 14.99 per cent at the last auction.