Naira in free fall, plunges to 480/dollar

The naira plunged further against the United States dollar to a new record low of 480 on Thursday, down from 472 it recorded on Wednesday. The currency had continued its two-week free fall on Monday, closing at 445 to the dollar after tumbling to 439 on Friday. On Tuesday, the currency closed at 452 to the greenback. Also on Tuesday, the external reserves hit an 11-year low of $24.61bn. “Dollar is very scarce in the market right now because many people don’t know how low it will fall in the near term, so people are holding on to their hard currencies in order to watch the direction of the market,” one dealer said. The President, Association of Bureau De Change Operators, Aminu Gwadabe, told Reuters that forex traders from neighbouring countries and some importers had also been moving in recently, mopping up dollars and putting pressure on the naira in a possible speculative bid. Chronic dollar shortage plunged the local currency to a wave of depreciation, which economic and financial analysts have linked to speculative attack on the naira and increased demand from companies and individuals.After trading between 423 and 425 for several weeks, the naira plunged to 428 last Wednesday. This came a day after the Central Bank of Nigeria’s Monetary Policy Committee retained the lending rate at 14 per cent contrary to calls by the fiscal authority, economists and stakeholders. Analysts have dismissed that recent declines had links to the MPC decision to retain the lending rate at the current rate. However, at the interbank market on Thursday, the naira closed at 305.31 to the dollar, up from 312.99 on Wednesday. Source: Punch