Naira Depreciates to N435 at Official Window

Naira Depreciates to N435 at Official Window

Naira depreciates by 4.82 per cent to N435 per the United States dollar at the Investors and Exporters foreign exchange window, according to data from the FMDQ Exchange platform.

At the same time, the Central Bank (CBN) also book a fresh devaluation of the local currency, currently quoted at N412.7 per dollar on its website today. The spot FX rate was adjusted from N410.95.

Despite a better external reserves position, the naira has continued to see much more pressure even while demand appears to have slowdown due to year-end effects.

There is, however, increased arbitrage opportunities with widening FX spread. Speculative activities have risen again and a further naira weakening is expected to reduce arbitrage.

In 2021, CBN has devalued the local currency by about 9%. In 2022, analysts have projected that there will be increased demand for the United States dollar ahead of Nigeria’s election in 2023.

Naira had opened the year at the official rate of N380 but closed at N412.70. In the middle of the year, the local currency official exchange rate was N410.16, according to official data.

In the parallel market, the exchange rate has weakened significantly with a value of the local currency tumbling by about 20% to close at N560 on Friday.

At the start of 2021, the Nigerian naira was traded at the parallel market at N470 for a dollar. Pressures were mounted on Naira in July 2021 when the Central Bank stopped weekly dollar supply to Bureau de Change operators.

The apex bank also in September announced a decision not to go back to Bureau de Change following alleged FX infractions.

In the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) Naira was knocked down to ₦435.00 as against the last close of ₦415.00. According to FSDH Capital note, most market participants maintained bids between ₦408.00 and ₦445.50 per dollar.

# Naira Depreciates to N435 at Official Window