Breaking: Panic buying pushes naira to N502/$1 on parallel market

The naira on Friday exchanged at N502 to dollar on the parallel market as panic buyers piled pressure on the local currency.

The naira lost N3/$1 when compared with N499 to dollar it closed on Thursday.

Managing Director/CEO Financial Derivatives Company Limited, Bismarck Rewane, said the naira was weakening because of panic buying by forex users, speculative trading and front loading of future demand.

“Our economic analysis based on the cobweb theorem of prices (exchange rate) moving towards an equilibrium says that prices will rise initially when there is a demand gap before falling in the short run.

“Therefore, we expect the forex market to correct itself in July with the naira appreciating towards N470-N490/$,” he said in emailed report to investors.

The naira continues to come under pressure after devaluation by the Central Bank of Nigeria (CBN) that pegged the official exchange rate at N410.25 to dollar.

Naira’s depreciation to new low has also been linked to dollar scarcity and forex speculators hoarding the available greenback to maximise profit.

Details later….