Contrary to the general belief that the Nigerian currency, the Naira would strengthen during the festive season with the expected increase in dollar flows from Nigerians abroad who come home for the holidays, expectations have fallen short and this may result in further depreciation of the local currency.
The naira was quoted at 490 to the dollar on Thursday from 495 it traded a week ago at the parallel market.
At the official interbank window, the naira was quoted at 310.25 to the dollar on yesterday, but closed at 305.25, the same rate it has traded in the last four months.
“We see the naira depreciating against the dollar by the time more businesses resume operations next week after the festive season as dollar liquidity remains thin in the market,” one currency dealer said.
The naira was exchanged for 490 per dollar on Wednesday against the 485 per dollar it traded on Tuesday at the parallel market.
The local currency, on Wednesday depreciated by 5 points while compared to the 485 per dollar it traded on Tuesday at the parallel market, and steady at the same rate on Thursday.
The local currency traded at 305.25 per dollar at the official interbank market rate yesterday, as currency analysts envisage further depreciation of the naira to 500 against a dollar in coming days.
The naira had tumbled against the dollar to 490 on Tuesday from 485 it sold on Monday, as traders linked the drop to acute shortage of the greenback.
A week ago, precisely last Monday and Tuesday, the currency traded flat at 490 after closing at 487/dollar the previous Friday.
The naira has been under severe and continuous pressure as the scarcity of the greenback continues to create ripples in the financial markets and the economy.
Before falling to 487 the previous Friday, the local currency had consecutively closed flat at 485 about two weeks ago.
A few weeks ago, the naira closed flat at 470/dollar against the greenback for some days.
The naira plunged to 470/dollar, down from 455/dollar on the back of a fresh dollar shortage at the official and parallel forex markets.
The naira has, however, consistently closed around 305.5 a dollar level since August via the official window.
The local currency has been under persistent pressure both at the official and parallel markets owing to the acute shortage of the United States currency.