Naira Continues Free Fall as Reserves Decline to $27.81bn

The value of the naira continued to diminish at the parallel market as the local currency fell to a record low of N357 to the dollar yesterday as demand for foreign exchange outweighed the declining supply.
The value of the naira has so far within the year dropped by  34 per cent at the parallel market from N265 which it sold in January, although the value had remained stable at N197 to the dollar at the Central Bank of Nigeria end of the foreign exchange market.
The end of dollar sales to bureau de change operators, a declining foreign exchange reserves and speculations that the CBN will halt dollar sales for school fees and medical tourism as well as the low price of crude oil at the global market has been the factors behind the declining value of the currency at the black market.
The external reserves of the country has continued to decline dropping to $27.81 billion as at February 15, 2016. The price of crude oil had risen to $32.32 per barrel from around $28 per barrel after talks with Saudi and Russia to cut output.
Nigeria earns around 90 percent of its foreign exchange earnings from crude oil exports, but mismanagement of its refineries means it must also import expensive refined fuel, eating deep into its reserves.
Some retail currency operators have few dollars in their vault and depend on other members to fill orders when they have excess demand, fuelling the weakness in the currency, traders say.
Acting president of the Association of Bureau de Change Operators of Nigeria (ABCON) Aminu Gwadabe noted that “most individuals who sell to us are no longer willing, but demand is piling up.”
Meanwhile, overnight lending rates of the Nigeria Interbank Offer Rates (NIBOR) rise to 4.0800 per cent yesterday from 3.9567 per cent which it had dropped to on Tuesday. 
Likewise, six months rates rose to 11.5007 per cent from 11.4530 per cent. One month and three months rates however dropped to 8.1289 and 9.8072 per cents yesterday from 8.2498 and 9.9500 per cents 

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