LAGOS: The naira firmed sharply on the black market on Tuesday as Nigerians who had stockpiled dollars ahead of last week's elections sold off their holdings when the feared violence and instability did not materialise, dealers said.
Opposition leader Muhammadu Buhari defeated incumbent Goodluck Jonathan in the March 28 vote which passed off largely without incident, to the relief of investors in Africa's biggest economy and most populous nation.
The naira firmed more than 6 percent to 197 to the dollar on the unofficial market from 210 on Thursday, the day before an extended Easter holiday weekend.
On the official interbank market, the currency was trading at 199 to the dollar, in line with the tight range within which it has traded since February when the central bank introduced a de facto peg after a devaluation.
"There are too many dollars in the market with no naira," one black market dealer told Reuters, adding that he had bought dollars as low as 226 just before the elections.
As well as fears of political instability stemming from the polls, Africa's biggest oil producer has been suffering an acute foreign exchange shortage due to a halving of the oil price over the last 8 months.
Crude sales account for 95 percent of Nigeria's foreign exchange.
The black market rally will be welcome relief to the central bank, which had been spending billions of dollars to keep the currency on an even keel. As of the end of last month, foreign reserves had dropped by a third to below $30 billion.
Financial markets have also applauded the outcome of the election, the first time a sitting president has been ousted via the ballot box.
The stock market shot up more than 12 percent on Wednesday and Thursday in the immediate aftermath of Buhari's victory but ended its 10-day rally on Tuesday as investors booked in profits, stockbrokers said.
The index was down 2 percent at 35,009 points at 1232 GMT.
"The excitement from the elections has waned as valuations look stretched after the rally but investors are now taking positions," one broker said.
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