Naira Suffers over US Dollar Scarcity, GBP Crosses N2000
The Nigerian naira suffered further setbacks from regaining its strength as exchange rates across forex markets continue to inch toward the worst ever red line. Both official and parallel markets saw demand exceeding total foreign currency supply despite multiple efforts to save the local currency from freefalling.
At the Nigerian autonomous foreign exchange market, the Naira depreciated by 3.94% to close at N1,598.54 per US dollar on Monday, data from the FMDQ platform showed.
Similarly, in the parallel market, the Naira weakened against the US dollar to close at N1,700 per US dollar at the same time. British pound or GBP crossed N2000 while the Euro traded close.
The worsening exchange rate has sent a negative signal that FX reform may eventually fail. Some analysts have already predicted that the US dollar could be at N2000 eventually if the supply side remains tight.
Naira is under pressure due to Nigerians’ over-dependence on imported goods. In addition, the recent past leadership of the Central Bank which is currently under investigation managed the monetary authority roughly. The current pressure facing the nation is the result of failed monetary and fiscal policies.
“Things will probably get worse, research analysts at LSintelligence Associates said in a discussion with MarketForces Africa, saying that usable external reserves are far below what we have today. At the close of business, external reserves printed at $33.2 billion – signalling there have been inflows lately.
FX inflows have been limited as foreign investors stay away from the financial markets. In recent times, Nigeria seem to be losing the attraction as the big bride to investors; Cowry Asset said in a review. Analysts explained that limited access to foreign exchange and the existence of multiple exchange rate systems still create uncertainties for investors on profit and dividend repatriation.
There are also concerns around insecurity which remains one of many threats to foreign investors and in turn discouraging investment inflows. The MSCI Index plans to remove Nigerian Indexes from the frontier market to stand alone on February 29, citing an inability to get dollars out from the country.
Global Commodity Market In the global commodity market WTI crude futures advanced by 0.23% to $79.38 per barrel on Monday. However, the Brent Crude decreased by 0.06% to close at $83.42 per barrel. #Naira Suffers over US Dollar Scarcity, GBP Crosses N2000
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