Naira Depreciates to N464 as Forex Scarcity Deepens
The Nigerian local currency, the naira, depreciated further, crossing a new red line amidst the ongoing foreign exchange (FX) crisis in the local economy. The Central Bank (CBN) is losing against a stance that it will not devalue the naira.
The exchange rate depreciated to N464 per United States dollar as demand exceeded forex supply for eligible transactions, though there was marginal inflow into the external reserves.
A slew of analysts has predicted that the naira will cross N500 except if foreign portfolio investment inflows improve. That has not been the case, foreign interest apathy in participating in the local economy continues to weaken.
Remittances have been affected by global economic development, especially inflation and job losses experienced earlier in the year in the developed economy where Nigerians work.
Nigeria’s gross external reserve increased slightly, rose by USD38.89 million week on week to close at USD35.43 billion, data from the Central Bank showed.
The FX receipts came after twelve consecutive weeks of decline – supported by a surge in crude oil prices.
Brent crude oil price advanced 1.3% to $86.25/bbl. last week, following signs of demand recovery in China as the most recent data showed oil imports jumped 22.0% in March.
Analysts at Cordros Capital told investors that total turnover at the window decreased by 27.4% up till Thursday to USD297.42 million – trades were consummated within the N460.00 – N507.08 band.
As of Friday, the activity level declined 50.2% to $297.4 million, according to separate analysts’ notes. Meanwhile, the Naira maintained dominance in the open market as it edged out the dollar to gain N9 or by 1.21% week on week to close at N738 from N747 in the previous week.
On the other hand, at the investors’ and exporters’ FX window, the Naira lost N0.75 or 0.16% week on week to close at N464/USD from N463.25. Data showed that at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchanged and closed at N462 per United States dollar on Friday.
The exchange rate in the weekly Naira FX Forward Contracts Markets was mixed. FX analysts saw a 1-month contract depreciate by 0.5% to N469.20, just as 3 months lost 0.5% to N485.8 and 6 months dropped 0.4% to N513.22. On the other hand, 1-year contract gained +0.6% to N562.49. #Naira Depreciates to N464 as Forex Scarcity Deepens
