Naira Declines to N1581, FX Reserves Hit 16-Month High
The Nigerian naira suffered another setback in the foreign exchange (forex) market as the exchange rate plunged to N1.581.65 against the US dollar. The spot rate worsened as eligible FX demand at the Nigerian autonomous foreign exchange market (NAFEM) eclipsed the volume of US dollars available for trade.
The disequilibrium position in the currency market has damaged the value of the naira. The conditions in the forex market worsened after the Central Bank of Nigeria (CBN) withdrawn US dollar sales to authorised dealers, banks.
The challenges of US dollar scarcity amidst rising demand for imports weakened the naira by 40% in the first half of 2024. However, the apex bank resumed FX sales at the official market to boost foreign currency liquidity. However, the impacts was less effective as rising demand for the US dollar clouded the CBN efforts.
In the official NAFEM market, the naira depreciated by 0.32% to close at ₦1,581.65 per US dollar on Monday. In the parallel market, the naira closed at ₦1,565 per greenback because of uptrend in invisible forex transactions by locals.
Data from the CBN showed that Nigeria’s external reserves climbed further to $35.772 billion, the level it was at on March 23, 2023. Gross external reserves hit a 16-month high after the country recorded additional FX inflows on Tuesday.
In the global commodity market, oil prices increased on Wednesday, rebounding from three days of losses due to a sharp decline in US oil stockpiles. Brent crude rose by 1.22% to $84.75 per barrel.
Similarly, West Texas Intermediate (WTI) crude extended gains by 1.82% to $82.23 per barrel. #Naira Depreciates to N1581, FX Reserves Hit 16-Month High Nigeria, Angola Inflation Highest in Frontier Markets -Report
