Naira Gains 6.58% to N742.93 as FX Supply Meets Demand
The Nigerian naira reclaimed significant value against the dominant foreign currency Tuesday at the organised market or official window as the United States (US) dollar demand logged met available foreign currency supply in the market.
Spot FX data quoted by FMDQ Exchange indicated that the Nigerian Naira appreciated by 6.58% against the US dollar in the Investors and Exporters FX window, closing at a rate of N742.93 per greenback.
The local currency crossed the red line last weekend when it traded above N803 amidst the US dollar shortage challenge in the country.
The local currency fell further on Tuesday by 0.61% to N830 per greenback in the parallel marker. Foreign currency traders attribute the sustained decline to rising forex demand by Nigerian users that seek to boycott deposit money banks bureaucracy.
After the devaluation, exchange rates have been moving negatively before pressures begin to cool off. It is expected that foreign portfolio investors would bring hot money into the economy after the local currency was valued downward in June 2023.
Analysts said Nigeria’s gross external reserves could plunge below $34 billion before the week runs out amidst ongoing debate that criticises the government for floating the naira.
Economists have mixed feelings about the direction of the Central Bank of Nigeria’s (CBN) foreign currency management amidst worsening price levels. Their claim against the apex bank is that devaluation of local currency only helps a productive economy.
A senior economic analyst asked: “What’s a country that depends on imports of goods and services doing with a large devaluation of the local currency while inflation is skyrocketing while salaries stagnate except steep perks for politicians?”
Oil market rallied Tuesday over a fiscal stimulus plan in China to drive economic growth. Brent crude rose 1.33% to $79.54 per barrel, while West Texas Instrument (WTI) crude gained 1.95% to $75.60 per barrel.
Oil futures were higher, supported by an improved demand outlook as indicated by a drop in the US crude output. Elsewhere, gold traded near $1,984 per ounce (+1.47%), boosted by lower US dollar and Treasury yields. #Naira Gains 6.58% to N742.93 as FX Supply Meets Demand Nigeria’s Inflation Rate Jumps to 22.79%
