Naira Depreciates on Parallel Market

The naira weakened against the US dollar on the parallel market on Tuesday as it closed at N320 to a dollar, lower than about the N318 to a dollar it was at the close of business on Monday.

It was gathered that some traders are still digesting the implications of the China deal on the market. The naira appreciated against the US dollar on the parallel market on Monday as traders continued to weigh the prospects of a currency swap between Nigeria and China.

President Muhammadu Buhari last week travelled with a high-level government delegation to China where he signed a $6 billion deal to fund joint infrastructure projects. During Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s central bank also signed a deal on yuan transactions.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, Director General of the African Affairs Department of China’s foreign ministry, told reporters.

The agreement was reached following a meeting between Buhari and Chinese President Xi Jinping.
A currency analyst at Ecobank Nigeria Limited, Mr. Kunle Ezun,  had told THISDAY that despite the excitement that trailed the Yuan currency swap deal, the fundamentals of Nigeria’s forex market were still weak.