After falling steadily all last week, the naira hit N400 against the dollar in the black market on Friday and was trading at N398 on Monday, according to traders in Lagos.
That was 25 per cent weaker than the interbank rate of N319 and the weakest level for the naira since the central bank abandoned its 16-month currency peg in June.
This suggested that the central bank was still intervening to prop up the naira’s official value, said analysts and business people in Africa’s biggest economy, pointing to the black market rate for the latest proof.
The official rate flattered the naira, said John Ashbourne of Capital Economics in London, noting that the far weaker black market rate was a better indication of the currency’s actual value.
“The official market seems to be incredibly thin, there is not a lot going on there and it is keeping people in the black market,” said Mr Ashbourne, adding: “This will keep a pretty wide spread [between the two rates].”
As was the case before the central bank buckled to pressure and switched to a market-driven currency system in June, the wide spread between the official and black market rates indicated a dollar scarcity that has worsened Nigeria’s economic woes in the past year.
Because the central bank has not eased its restrictions on foreign currency for importers, many local companies are continuing to use the black market to source funds, said Frank Jacobs, president of the Manufacturers Association of Nigeria.
“Manufacturers are not getting much from the interbank market,” he said. “There’s still a problem with liquidity and unmet demand.”
“What we’re seeing in the black market signals what’s happening on the current account side, particularly in the trade account,” said Yvonne Mhango, chief sub-Saharan Africa economist at Renaissance Capital.
Second-quarter GDP figures are expected to be released by the government’s statistics bureau within days.
The economy shrank by 0.4 per cent in the first quarter and the International Monetary Fund now expects it to contract 1.8 per cent this year.
Source: FT
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