Naira’s Decline to N1082 Reduces FX Gap –Analysts
The Nigerian naira’s decline to N1082 has reduced the gap between official and parallel market rates, analysts said in a chat with MarketForces Africa.
This is a pointer that the local currency is seemingly trading above its true value, one analyst said in a chat, adding that the exchange rate at the parallel market has remained within the N1200 to N1300 range for months.
In its economic outlook, CardinalStone Partners Limited, projected the official exchange rate will hit N1,000, though naira has consistently traded above this expectation for a while. Naira Lost 11% as Banks Issue New Update on FX Spending
FX traders and market analysts are of the view that the devaluation of the Naira in June 2023 has yielded no results, instead, the value deduction has put pressure on Nigerians and corporates.
A large number of companies with FX liabilities are groaning as the amount to settle their obligations spiked significantly after a whopping 40% devaluation of the local currency.
Still, there is no market clearing rate while the depreciation of the naira has in no way curtailed Nigerians’ appetite for imported goods. The depreciation has made Nigeria’s headline inflation rate, coupled with the removal of fuel subsidies.
Data from FMDQ showed that the Naira appreciated by 0.66% to close at N1,082.32 to the US dollar. In the parallel market, the Naira closed at N1,239 per dollar. From more than 45%, the gap between parallel and official exchange rates has dipped to 15%.
External reserves remained tight at $33 billion. Meanwhile, in the global commodity market, prices of crude oil have started to recover from shock.
Yesterday, West Texan Intermediate (WTI) crude futures advanced by 0.77% to $72.80 per barrel on Wednesday. Also, the Brent Crude closed higher at $78.18 per barrel.
