The black market naira is running out of steam as latent dollar demand returns to the market, says leading Nigerian economist, Bismarck Rewane.
When the naira exchanged for a premium of around N480-N500 against the US dollar, it curbed the appetite of businesses that found the dollar unaffordable at the said rate, thus shaving some demand off the market.
But after the currency became 20 percent cheaper against the dollar at the black market, following supply interventions by the Central Bank of Nigeria (CBN), these businesses are resurfacing to meet dollar needs they had abandoned, Rewane, who is Chief Executive Officer of Lagos-based Financial Derivatives Company (FDC), observed.
“The naira depreciation we have seen in the last three days is driven by speculative and latent demand, but more of the latter,” Rewane said by phone. “Some of the latent demand that submerged when the naira was not cheap enough is coming out now.
LOLADE AKINMURELE
