Naira slides again as demand rises by 38%

The Naira depreaciated further at the official and interbank foreign exchange market as demand at the official bi-weekly foreign exchange auction rose by 38 per cent on Wednesday.

Demand rose to $383.3 million from $277.1 million while the Central Bank of Nigeria (CBN) increased amount sold to $350 million from $250 million. Consequently, the official foreign exchnage rate rose to N153.03 per dollar from N152.91 per dollar last week, implying 12 kobo depreciation. Following the same trend, the interbank exchange rate rose to N154.96 per kobo from N154.93 per dollar.

The rising sharp increase in demand might not be unconnected to the the long eater/election and the Workers Day holiday which resulted in closure of the official foreign exchange auction twice in the last two weeks.

On the international scene, the yen and franc gained against most major currencies, with the Swiss currency touching a record high against the dollar, as a drop in commodities and stocks damped appetite for higher-yielding assets.

The euro reached its strongest in 17 months versus the dollar on speculation European Central Bank President Jean- Claude Trichet will signal further rate increases after policy makers meet tomorrow. New Zealand’s dollar was the worst performer against its 16 most-traded peers. The U.S. dollar slipped on weaker-than-forecast economic data and speculation the Federal Reserve will maintain economic stimulus.

“Those safe havens, the yen and the Swiss franc, are much stronger,” said Brian Dolan, chief strategist at FOREX.com.a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “It’s a risk liquidation taking place.”

The yen appreciated 0.5 percent to 80.51 per dollar at 1:01 p.m. in New York and touched 80.44, the strongest level since March 18. The franc strengthened to a record 85.54 centimes per dollar before trading at 85.96 centimes.

The euro gained 0.2 percent to $1.4848, from $1.4825 yesterday. It touched $1.4940, the highest level since it reached $1.5091 on Dec. 4, 2009. The shared currency dropped 0.4 percent to 119.54 versus the yen, from 119.99.

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