The Naira yesterday weakened to the lowest in over three years at the parallel market due to increased demand for dollars amid foreign-currency shortages.
The exchange rate between the naira and dollar depreciated to N390/$1 at the FMDQOTC NAFEX market, an official market where the exchange rate is traded.
At the parallel market (black market) the exchange rate fell to N495/$1 on Friday closing the week at the weakest price since 2017.
The depreciation is the lowest since February 23, 2017, widening the gap with the official rate of N379.5 to over 30 per cent.
Wired transfers done outside of the official system closed as high as N503/$1.
Agency reports quoted traders as alleging a groundswell of diversion of dollars, a development which heightened scarcity of the green back in the parallel market this week.
There is a diversion of inflows away from official channels to the parallel market due to the gap in rates, Murega Mungai, trading desk manager for Aza Finance said in a note Thursday.
The market spread has created arbitrage opportunities for recipients of remittances such as exporters and private individuals.
Pent up demand in the foreign exchange market is not unprecedented given increase purchase of items in preparation for seasonal festivities, Nkemdilim Nwadialor, analyst at Tellimer markets said.
“This has been compounded by the fact that all through the year, we have had dollar shortage,” she said.
