Barely one week after the Central Bank of Nigeria devalued the naira by 8.4 per cent in a bid to reduce the pressure on the falling national currency, the naira on Monday again fell by 3.4 per cent to a new low of N184.10 against the dollar, down from the N178 it fell to on Friday.
The CBN’s Monetary Policy Committee had, on Tuesday, devalued the naira from N155 to N168 per dollar, following several weeks of continued fall that brought the naira to N177 per dollar last Monday.
The CBN was aiming to keep the dollar within the target band of N171.5 to 176.5 (N168 plus or minus five per cent).
Last Wednesday, a day after the devaluation, the naira rebounded slightly but closed at N176.80, about 30k outside the lower end of the CBN’s target band.
On Thursday, the naira fell by 0.22 per cent to N177.40 against the dollar, trading further lower than the target band.
The national currency has been volatile and under pressure since the central bank announced the devaluation on Tuesday.
On Friday, the naira fell by 2.5 per cent despite central bank intervention, and it briefly touched a record low on concerns that the Organisation of Petroleum Exporting Countries’ decision not to cut oil output would put further pressure on Nigeria’s shaky finances.
On Monday, the naira crashed to N184, from N178 which it fell to on Friday.
Foreign exchange dealers linked the fall of the naira after the devaluation to the market’s inability to cope with high demand for the dollar both at the interbank and Retail Dutch Auction System forex markets.
Some industry players predicted that the dollar might fall further in the coming days if the CBN failed to cope with the expected demand.
The external reserves have dropped by over 17.5 per cent to $36.8bn as of November 27, according to the new report on the CBN’s website on Monday.
Analysts said the falling global oil prices had brought an uncertain outlook to the naira and the currencies of other oil-dependent nations.
The Russian rouble and Angola’s kwanza have continued to be under pressure.
Brent crude fell more than $6 to $71.25 a barrel after the OPEC ministers’ meeting in Vienna left the group’s output ceiling unchanged despite huge global oversupply, marking a shift away from its long-standing policy of defending prices.
Oil sales provide around 95 per cent of Nigeria’s foreign exchange and the naira is being driven down by concerns that the falling oil price will put further pressure on the nation’s shaky finances.