Naira on a bad side at the closure of 2014

Mr. Godwin Emefiele - CBN Governor

The naira closed the year 2014 on Wednesday at 181.50 to the United States dollar at the interbank market and between 191 and 193 on the streets, against the 160.60 recorded on December 31, 2013.

The local currency had over a week ago traded for N194 to the dollar at the parallel markets in various parts of the country. Dealers, however, said the amount of the greenback in circulation was still scarce.

The 181.50 recorded at the interbank market is about six naira higher than the N160-N176 target band the Central Bank of Nigeria set for the currency on November 25, 2014, when it devalued the currency by eight per cent.

The external reserves have, however, continued to fall despite the devaluation of the naira. The reserves fell to $34.5bn on December 29, according to data posted on the CBN website on Wednesday. This represents a 20.8 per cent fall from the $43.6bn recorded at the end of 2013.

The naira has been under intense pressure in the last few months following the continued fall in the global prices of crude oil. Falling oil prices, which forced the CBN to devalue the naira, have continued unabated. As of Wednesday, the Brent crude oil price was $56 per barrel.

In a bid to curb the naira slide, the CBN had also stopped the banks from holding their own funds in dollars. It also said that dollars bought from the interbank market could be held only for up to 48 hours. The measures, the CBN said, were meant to stop the banks from speculating on the currency. The central bank had blamed the banks partially for the continued slide in the currency.

The Head, Investment, Afrinvest, Mr. Ayodeji Ebo, said the falling oil price and some regulatory measures had made the situation of the naira to be worse, especially in the last quarter of the year.

He said 2015 would be challenging for the currency but expressed the hope that the CBN would come up with measures to contain the situation.