ByÂ Babajide Komolafe
*As scarcity of funds intensifies
The Naira appreciated further against the dollar in the parallel market gaining 150 kobo last week.Â The currency also gained five kobo at the official market following sharp fall in amount of foreign exchange sold by the Central Bank of Nigeria (CBN)
Meanwhile, scarcity of funds intensified in the interbank money market sending cost of funds to pass the 21 per cent mark last week.
It would be recalled that the Naira in the last three weeks has been appreciating steadilyÂ in the parallel market. The previous week it gainedÂ N5 against the dollarÂ with the exchange rate falling to N156 per dollar to N156 per dollar. Last week the parallel market exchange rate fell to N1 indicating another 150 kobo appreciation.
A parallel market operator said that the appreciation of the Naira in the market was due to low demand. The demand is not just coming and a lot of people that had hoarded dollar hoping the exchange rate would rise further had been selling off due to the decline in exchange rate.
The Naira also appreciated by five kobo at the official market as the exchange rate fell to N146.7 from N146.75. The previous week the Naira declined at the market by six kobo fue to 100 per cent rise in demand at the Retail Dutch Auction System (RDAS) sessions. Last week appreciation was prompted by fall in demand as reflected by the total amount sold by the apex bank which fell by 41.7 per cent to $151.354 from $260.06. On the international scene, the dollar rose against the euro lastÂ week as speculation the economic recovery is faltering boosted demand for the safety of the U.S. currency.
Agency report said The Dollar Index, which tracks the currency against six major U.S. trading partners, advanced to near the highest in a week after a report showed U.S. employers cut more jobs last month than economists forecast. The pound had its first weekly loss in a month after a report showed U.K. service industries were little changed in June as the recession persisted. â€œ
The dollar advanced 0.5 percent to $1.3984 per euro as of 2:08 p.m. in New York yesterday, from $1.4056 at the end of last week. It reached $1.3929 yesterday, the strongest level since June 25. The yen was at 134.27 per euro, from 133.85 a week earlier. The U.S. currency rose 0.9 percent to 96.00 yen.
The pound was at $1.6328, for a weekly decline of 1.2 percent. The U.K. currency declined 0.3 percent in the week to 156.77 yen, after reaching the weakest level since June 25. Meanwhile, cost of funds in the Nigeria Interbank Money Market rose beyond the 21 per cent mark last week as scarcity of funds intensified in the market. Interest rate on Call, Seven days and 30 days lending rose to 21.4,Â 21.6,Â Â and 21.6Â per cent respectively from 19.6,Â 20 and 20.5 per centÂ the previous week.