The naira on Tuesday closed at N181 after it initially fell to N187.55 against the dollar during the early trading session at the interbank foreign exchange market. The national currency had closed at N184.10 on Monday. The further decline on Tuesday had forced the Central Bank of Nigeria to intervene three times, selling an undisclosed amount of dollars to commercial banks in order to support the naira.
The uncertain outlook of the naira owing to falling global oil prices has kept the national currency under persistent pressure.
According to analysts, continued high demand for the dollar by investors, some of whom are bringing forward their obligations for fear that the naira will keep falling, is putting pressure on the currency.
The CBN’s Monetary Policy Committee had, last Tuesday, devalued the naira from N155 to N168 against the dollar in a bid to reduce the pressure on the currency.
The move was meant to also halt the depletion of the external reserves, which was being used to defend the naira. The reserves stood at $36.8bn as of December 1, 2014, compared to $44.6bn a year ago.
The devaluation of the naira appeared to have failed to keep the naira in the target band of plus or minus N168 (N159.6 to N176.4).
Economic and financial analysts said the CBN might be forced to carry out another devaluation if the naira continued to depreciate.
“The continued fall of the naira shows that the recent devaluation by the CBN may not be sufficient enough to keep the naira within the target band; the central bank may be forced to do another one,” an analyst at Afrinvest, a research and investment firm, Mr. Ayodeji Ebo, told our correspondent on Tuesday.
“The market is driving the naira-dollar exchange rate beyond the CBN’s expectation,” he added.
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