Naira Depreciates Further as FX Demand Spikes
Uncertainties about the future of the Nigerian local currency, the naira, widened with persistent free falling at the foreign exchange market. Across the market, the naira is losing its foothold against the United States dollar amidst rising demand for imports payment by eligible FX users.
The naira on Tuesday exchanged at 452.67 to the dollar at the Investors and Exporters FX window. The figure represented a decrease of 0.26 per cent, compared with N451.50 it exchanged on Monday.
The disequilibrium position is caused by lower exports receipt as against the level of dollar outflows in the market. Trading data shows that the open indicative rate closed at N448.80 to the dollar on Tuesday.
An exchange rate of N452 to the dollar was the highest rate recorded within the day’s trading before it settled at N452.67, according to FX traders.
The naira sold for as low as 440 to the dollar within the day’s trading. A total of N134.04 million was traded at the official Investors and Exporters window on Tuesday.
In the second half of 2022, naira has lost 10%, from exchange rate of N415 that was marinated at the Investors and Exporters FX window as monetary authority slowdown on market interventions.
As a result of its fresh red line crossing, FX has widened and analysts have raised their devaluation frenzy louder, saying there is no indication that the local currency will recover. >>Naira Heading for Devaluation, Analysts’ Consensus
Naira is stretched across the foreign exchange market while galloping headline inflation rate continues to weak purchasing power, reducing real value of individual and corporate wallets.
Bank of America recently said the naira is 20% above its fair value in the official foreign exchange market with expectation that by the end of first quarter in 2023, the central bank would have corrected the overvaluation. # Naira Depreciates Further as FX Demand Spikes