The naira has weakened further to 369 per United States dollar on the back of waning supply of the greenback in the foreign exchange market.
Although the external reserves have reportedly hit $33bn, the Central Bank of Nigeria appears to be reducing its intervention, both in frequency and amount, in the foreign exchange market.
This development seems to have kept the local unit between 365/dollar and 369/dollar in recent weeks.
After closing flat at 365/dollar for one week despite interventions in the forex market by the CBN, the naira weakened to 367/dollar last Tuesday.
After trading flat at 367/dollar for a few days, the local unit closed the week at 369/dollar on Friday.
The CBN has managed to keep the exchange rate within the 365/dollar to 370/dollar band in the past few months, thanks to the billions of dollar it injected into the market during the period.
An economic analyst, Mr. Johnson Chukwu, said the CBN remained the market maker in the country’s forex market.
As such, he said the regulator, to a large extent, would continue to determine the naira/dollar exchange rate.
Chukwu said, “The CBN determines what it intends to do with the exchange rate at every point in time. The naira will continue to trade between 350 and 400. The naira is still not totally market-determined.
“We have seen the naira depreciate at the Investors & Exporters FX window from 340/dollar to about 360/dollar. The CBN may be driving to conserve the reserves. It may also be seeking to achieve exchange rate convergence.”
“However, we should not also overlook the fact that the demand for dollar will keep increasing at this season because merchants are busy making order for product for sale during the Christmas,” he added.