The naira continued its decline against the dollar at the parallel market yesterday, dropping to N1,080 per dollar from N1,050/$1 on Tuesday, currency dealers said. However, the local currency appreciated against the greenback at the Investors and Exporters’ (I&E) window (the official market) yesterday, as it closed at N790.68 per dollar compared with N848.12/$1, on Tuesday, data obtained from FMDQ Exchange shows.

The naira has been on a free fall at the parallel market in recent weeks, occasioned by persistent dollar shortages in the system. Analysts note that the decision by the Central Bank of Nigeria (CBN), last Thursday, to lift its foreign exchange restriction on 43 imported items and the apex bank’s announcement that it will be boosting liquidity in the FX market by intervening “from time to time,” have not positively impacted the value of the naira.

Financial experts had been urging the CBN to lift the fx restriction on the 43 items, which they blamed for the widening gap between the official and parallel market exchange rates of the naira in recent months. Indeed, in a report last Friday, Bloomberg said that the removal of the forex restrictions resulted in liquidity at the I&E window increasing more than fivefold to $407.7 million on Thursday and also led to the naira appreciating for the first time in three weeks at the parallel market Friday.

The report quoted Head of Research at Chapel Hill Denham, Tajudeen Ibrahim, as saying: “The supply was mainly from sources outside the central bank but I expect central bank supply to in- crease.” He added that the announcement on Thursday “is an indication that the central bank wants to be more frequent in its intervention,” which will moderate the rate in the parallel market.

He, however, said that the CBN’s ability to win investor confidence and stabilise the market would depend on the country’s capacity to accumulate dollars.