Naira Depreciates over Rising FX Demand, Election Jittery
The Nigerian naira depreciates further midweek as demand for foreign currencies, especially the United States dollar, spooked exchange rates (FX) across the market ahead of the presidential election on Saturday.
The election jittery raised demand for the United States dollar at the parallel market to N772 while the Naira was sold at N461.60 against the greenback at the Investors and Exporters window.
The exchange rate at Investors’ and exporters’ FX window means the local currency lost 0.06 per cent of its opening value when compared with the N461.33 it exchanged on Tuesday.
According to currency traders, the open indicative rate for the day closed at N461.35 to the dollar on Wednesday.
Meanwhile, an exchange rate of N462.01 to the US dollar was the highest rate recorded within the day’s trading before it settled at N461.60. Market data indicated that the Naira sold for as low as N446 to the dollar within the day’s trading.
A total of 81.95 million dollars was traded at the official Investors and Exporters window on Wednesday. A number of bureau de change operators told MarketForces Africa that the scarcity of naira notes also impacted demand.
“To a greater extent, scarcity of new naira notes reduce demand pressures …by now, given that election is nearing, US dollar rate might have crossed N800 per greenback at best”.
In 2023, some foreign exchange analysts projected that the naira will drop to N500 in their best-case scenario at the investors’ window. Late last year, Bank of America said in a report the local currency is 20% overvalued, hoping to see the naira adjusted to its fair value in the first quarter of the year.
