The naira dropped further to 313.5 against the United States dollar at the parallel market on Tuesday as shortage of foreign exchange, especially the greenback, persists in the forex markets.
The local currency had traded for 310 to a dollar on Monday.
On Tuesday, the naira closed at 199.40 to the dollar on the interbank market, according to Reuters, around the peg rate of 197 to the dollar.
This came just as the interbank lending rate rose to two per cent from one per cent on Monday, after the Central Bank of Nigeria had directed commercial banks to fund their naira accounts ahead of its intervention in the forex market on Thursday.
The CBN intervenes once a week at the interbank forex market to provide dollar liquidity for some eligible importers.The overnight lending rates jumped by 100 basis points as the movement of naira cash for forex purchases drained liquidity in the financial market.
The naira had plummeted against the dollar last month after the CBN banned dollar sales to Bureau De Change outlets and later stopped daily sales to the interbank market.
The measures were aimed at conserving the nation’s external reserves, which have hit an 11-year low at $28bn.
“The overnight rate went up today to three per cent in the early trade but declined to two per cent after some banks funded their forex accounts,” one dealer said.
The interbank rate mirrors the level of naira liquidity in the banking system.
Traders said commercial lenders’ credit balance with the central bank opened at N978bn ($4.94bn) on Tuesday before the bank called for the funding for forex purchases.
The central bank requires banks to fund their forex account 48 hours in advance of its intervention.