Naira Depreciates Further as FX ‘Paparazzi’ Slows
Nigeria’s negative volatile local currency, the naira, suffered moderate value depreciation in the official window Thursday as FX paparazzi continues to slowdown.
For weeks, exchange rate had maintained uptrend at the Nigeria’s autonomous foreign exchange market, reflecting low pressure from the informal currency market.
The apex bank has been selling US dollar at reduce spot rate to influence exchange rate direction after setting limit of FX spread for Bureau de Change operators in the informal market.
But the Central Bank of Nigeria (CBN) leadership told the global audience the monetary authority under Yemi Cardoso is not defending the naira, and then market sentiment switched negative since the beginning of the week.
Since this week, the volume of US dollar requested from various imports payments at the official window outpaced the supply side, creating imbalance between warring forces.
The nation’s foreign external reserves climbed to $32.117 billion, according to latest update on the CBN website. There have been accretion into the gross external reserves since the beginning of the week as against a total balance of $32.106 billion last week Friday.
According to information obtained from FMDQ Securities Exchange, the Naira experienced a 0.10% depreciation against the US dollar, settling at ₦1,309.88 as the official rate.
In the parallel market, exchange rate has worsened to ₦1,400 even after the CBN announced subsided FX sales of $10,000 at N1,021 at the beginning of the week.
Inconsistent support for the naira is responsible for its latest downward movement, analysts said in a chat with MarketForces Africa.
“No matter how we look at it, demand and supply remain the only unbiased resources allocators in every economy. If there is strong FX inflows sufficient enough to meet US dollar demand, the naira would gain – vice versa. Any other measure is shortermist and it will always bounce back on exchange rates across forex markets”
In the global commodities market, prices of crude oil experienced a negative outcome. Brent crude decreased by 0.52%, to close at $87.44 per barrel, and West Texas Intermediate (WTI) crude saw a decline, dropping by 0.68% to $82.14 per barrel. #Naira Depreciates Further as FX ‘Paparazzi’ Slows
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