Naira Depreciates to N414.80 at Official FX Window
The Nigerian Local currency, naira, depreciates 0.18 per cent at the official exchange rate on Tuesday to N414.80 from the previous close of N414.60 as demand for dollar spikes.
Largely, growing numbers of analysts are expecting naira to be devalued as the local currency is unable to hold for the in the foreign exchange market. Recently, the Central Bank (CBN) devalued the local currency at the interbank foreign exchange market by about 13%.
A devaluation of naira would make more Nigerians poorer overnight, senior consultant at LSintelligence Associates said in a webinar meeting on Tuesday.
CBN is delaying the inevitable, investment banking expert Kingsley Aigbe CFA told MarketForces Africa in a chat.
Most participants maintained bids between ₦405.00 and ₦444.00 per dollar at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate, according to the FSDH Capital analyst note.
Analysts at Cordros Capital Limited have maintained that the local currency is overvalued based on a real effective exchange rate.
Noting a better than usual external reserves position, analysts at the firm maintain that Nigeria requires inflow from foreign investors to keep dollar supply flowing at the pre-pandemic level.
In the Investors and Exporters FX window, the investment firm analysts hinted that foreign portfolio investment (FPI) accounted for a larger chunk of dollar transaction inflows in the segment.
Recently, the International Monetary Fund in a mission to Nigeria advised the CBN to adopt a market-clearing exchange rate to attract foreign investments into the dollar-starved Nigerian economy.
Fitch Ratings, in a commentary, is expecting foreign currency scarcity to persist as Nigerian banks started a fresh foray into Eurobond market for capital raise.
“With FX shortages expected to persist, banks will continue to rely on internal resources. Banks that are able to tap external funding will see the cost of borrowing rise due to global factors”.
While further devaluation is not impossible in the mid to long term, a weak naira would impact the price level and already worrisome unemployment rate.
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