Naira Disappoints as FX Market Crisis Gets Messy
The naira traded negatively against the US dollar in the official and informal currency market due to sustained foreign currency liquidity challenges.
In the official window, naira crossed N1,621 per US dollar amidst what analyst called late FX market intervention by the central bank—selling the US dollar to banks and bureau de change after the local currency has lost enough.
The worsening exchange rate has partially disappointed all the naira bulls that predicted lower rates in the forex market.
Demand is rising faster than the amount of US dollar available for transactions by the FX bidders at the Nigerian autonomous foreign exchange window on Tuesday.
The outlook for the naira looks bleak as FX sales to authorised dealers appear to be insufficient to upturn the local currency fortune.
The post devaluation experience in the market has been damaging for corporate organisations and the end to this mess appears not to be in sight.
The monetary authority’s blue sky thinking on exchange rate devaluation has worsened the economic conditions in the last one year.
Latest earnings releases from some listed companies show that the negative air has persisted, resulting in price hikes in basic goods and prices, and helping inflation to rise.
In the official NAFEM market, the naira ended the session at ₦1,621.12 per US dollar, according to data from the FMDQ platform, marking a 0.60% depreciation from the previous close.
The same experience was felt in the informal currency market, even with the surge in gross external reserves.
The naira averaged ₦1,585 per US dollar, reflecting a 0.57% depreciation from the prior session in the parallel market, according to channel check.
“The fact that total volume of US dollar available in the official market remains limited, insufficient to meet demand logged by authorised trader speaks to the sustained decline in the value of the local currency’, analysts said in a chat with MarketForces Africa.
Today, gross external reserves climbed to $36.708 billion, data from the Central Bank showed, hitting 18-month high on Monday.
The accretion into external reserves had raised hope that the apex bank intervention would be strong. On the contrary, FX intervention has been mild, and insufficient to boost the local currency value.
In the global commodity market, Brent crude price decreased by 1.30% to $78.75 per barrel. Similarly, West Texas Intermediate (WTI) crude fell 1.27% to $74.84 per barrel on Tuesday. #Naira Disappoints as FX Market Crisis Gets Messy
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