The Naira fell by four percent against the dollar to 187.05 at the interbank exchange market on Wednesday. This is the highest fall in five years on a closing basis, according to analysts.
Foreign exchange experts linked the development to the Central Bank of Nigeria's announcement that its Wednesday's auction at the Retail Dutch Auction System window was the last for the year.
It was learnt that traders and importers, who could not access the RDAS window, rushed to the interbank forex market to place their demand.
This, dealers said, led to huge demand for the greenback at the interbank market, forcing the interbank rate to close at a high of 187.05, from 180.50 on Tuesday.
The CBN said the official window of the foreign-exchange auctions would reopen on January 5, 2015.
Analysts said the central bank might need to defend the naira at the interbank market regularly till the end of the year to minimise pressure on the naira.
"Banks may start selling their stock of dollars at high premium since the greenback is no longer available at the RDAS window till next year," the Head, Investment Research, Afrinvest, a research and business advisory firm, Mr. Ayodeji Ebo, said.
"The CBN will need to keep intervening at the interbank market to keep the naira-dollar exchange rate stable for that period," he added.
According to Punch, a currency strategist at Ecobank Nigeria, Mr. Kunle Ezun, added that "If the rate remains at this level tomorrow, we expect the central bank to intervene in the interbank market with sales of dollars."
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