Nigeria’s naira touched a new record low of 183.05 against the dollar on Monday, driven by concerns over a sustained low oil price and expectations foreign investors would demand more dollars to pull out of local assets, dealers said.
The currency was trading down 2.4 per cent from Friday’s closing level.
The central bank has struggled to keep the naira within its preferred band even after devaluing the currency by 8 per cent last Tuesday in a bid to halt a decline in the foreign reserves of Africa’s biggest
economy. Oil sales provide around 95 per cent of those reserves.
The bank’s target band after devaluation is 5 per cent plus or minus 168 to the dollar, but doubts remain about whether it went far enough given the likelihood of continuing low oil prices and the fact
that Nigeria’s oil savings were being depleted even during a period of record high crude prices.
The coming weeks will test the bank’s ability to maintain that level – the naira is trading well below it and forex reserves are running out, reports
Reuters.
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