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Naira depreciates as forex demand rises

The naira yesterday depreciated in both the official and interbank market following 60 per cent rise in foreign exchange demand.

At the official market the naira depreciated by 25 kobo as the official exchange rate rose to N151 from N150.75 per dollar. At the interbank market, it depreciated by 32.5 kobo as the interbank exchange rate rose to N153.695 from N153.6 per dollar.

The depreciation was occasioned by 60 per cent demand for foreign exchange at the bi-weekly foreign exchange auction conducted by the Central Bank of Nigeria (CBN) on Monday.

Results of the auction show that demand shot up to $592 million from $369 million  in the previous auction. Although the CBN also increased supply by 60 per cent to $400 million from $250 million, the demand still outstripped supply by N192 million.

This increased demand pressure in the interbank market and caused the interbank market to increase.Last week, demand for foreign exchange at the official market rose by 8.5 per cent last week while the amount offered and sold by the apex bank rose by  7.7 per cent.

Results of the bi-weekly Wholesale Dutch Auction System (WDAS) show that demand rose to $822.1 million from $757.6 million.  CBN increased supply to $700 million from $650 million.

Despite the inadequate supply, the naira appreciated by two kobo  as the official exchange rate dropped marginally to N150.75 per dollar from N150.77 the previous week. But the naira depreciated by 20 kobo at the interbank exchange rate closed at N153.6 per dollar from N153.4 the previous week.


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