Nigeria Naira Firms On Parallel Market After President Rejects Devaluation

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Nigeria’s naira firmed sharply to 375 on the parallel market on Monday after importers started to reduce demand for dollars following the president’s defiance over devaluing the currency, hit hard by the fall in global oil prices, one trader said.

The naira firmed 4 percent from Friday’s close of 390 to the dollar, while the official interbank rate remained at 199.50 to the dollar at the close of trading on Monday.

Aminu Gwadabe, the head of Nigeria’s bureaux de change association, said that retail currency operators were working to introduce a single quote across the parallel market and maintain a bid-ask spread of 3.5 percent for trades.

“We have set up a unit to monitor compliance with the new measures,” he told Reuters, adding that the central bank has been informed of the measures.

President Muhammadu Buhari on Saturday again rejected the idea of devaluing the West African nation’s currency, despite a hammering of the naira on the secondary market last week.[nL8N15Z0M5]

Gwadabe said the market was trying to adjust to the reality of no currency devaluation by the government.

The central bank has resisted the depreciation by imposing hard currency curbs. It banned dollar sales to retail currency outlets last month, sending the naira to record lows on the parallel market, and later stopped daily sales to the interbank market, in an effort to conserve reserves, now at their lowest in more than 11 years.