Naira Crashes as Markets Fail to Meet Forex Demand

The Nigerian naira crashed further due to demand threat across foreign exchange markets. Both official and parallel markets experienced negative exchange rate movement a day after the Islamic holiday due to foreign currency shortage in the economy.

The local currency continues to lose value due to an imbalance between foreign currency demand for importations, purchases for the private sector and individual needs and the supply side.

At the investors’ and exporters’ forex window, the Nigerian naira depreciated by 2.68% against the US Dollar, closing at N775.31, data from the FMDQ platform showed.

The Naira saw demand pressure hitting harder across the various forex markets despite the news on the confirmation of the new Central Bank of Nigeria (CBN) Governor.

Also, at the parallel market, the local currency depreciated by 0.80% to close at another new low of N1,008, according to channel checks. Some traders said they have less and less foreign currency each day to meet rising demand from invisible users.

MarketForces Africa Research noted that the nation’s external reserves plunged marginally, closing at $33.261 billion at the time of writing on Thursday. 

In the commodities market, West Texas Intermediate (WTI) crude oil futures eased slightly to $90.05 per barrel on Thursday as traders took profit amidst other macros around oil price oscillation.

The Brent Crude closed at $93.17 per barrel on the back of bargain hunting and interest rate worries. For the naira, analysts remained bearish, saying there is no respite in sight.

The CBN participation at the Investors and Exporters Fx window has been weak. The apex bank decision was not unconnected to the recent devaluation of the local currency.  Naira Crashes as Markets Fail to Meet Forex Demand Naira Devaluation Deepens Economic Crisis in Nigeria