The naira rose to 375 against the dollar at the parallel market on Monday as the demand for the greenback began to drop.
The demand for the United States’ currency, which closed at 390 against the naira on Friday, had been on the rise in the past two weeks, forcing the local currency to enter a free fall mode.
Foreign exchange dealers told our correspondent that the demand for the greenback started waning after President Muhammadu Buhari restated its resolve that he would not devalue the naira.
“The demand for forex, especially the dollar has started reducing; it became obvious over the weekend when the President repeated his decision not to devalue the naira,” a forex dealer at Lagos Island, Alhaji Ibrahim Lawal, told our correspondent.
“I cannot determine if this will continue throughout this week; we hope the naira will firm up over the coming days,” he added.
The CBN official interbank rate remained at 199.50 to the dollar at the close of trading on Monday.
The central bank has resisted the depreciation by imposing hard currency curbs. It banned dollar sales to retail currency outlets last month, sending the naira to record lows on the parallel market, and later stopped daily sales to the interbank market, in an effort to external reserves, now at their lowest in more than 11 years.
Financial analysts and experts said the outlook for the naira looked bleak.
“The naira may moderate slightly this week at the parallel market given the recent statement of the CBN on school fees and medical bills. However, the spread will continue to incentivize round-tripping and speculations,” the Head, Investment Research, Afrinvest West Africa, Mr. Ebo Ayodeji, said on Monday.
Economists are divided as to whether the CBN needs to devalue the naira or not.
While some believe the CBN needs to act fast and devalue the currency, others believe there is little the central bank can do in the absence of robust external reserves.