Naira Gains amidst Uncertainties in Nigeria’s Economy
The Nigerian local currency, the Naira, appreciated to N461.10 to the United States (US) dollar at the Investors’ and Exporters’ foreign exchange (FX) window on day-to-day comparison amidst twists and turns in the economy.
The gain reported came as transactions level begin to nosedive amidst pressures in the local economy. Almost at the same, the US dollar index declined in the global market against major trading pairs after closing year 2022 on a solid footing.
The exchange rate of N461.10 represents an appreciation of 0.02 per cent compared with the N461.17 it exchanged on Wednesday. Market data show that the open indicative rate closed at N461.25 to the dollar on Thursday.
In the market, traders reported that an exchange rate of N462 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.10.
The naira sold for as low as 439.96 to the dollar within the day’s trading. A total of 40.24 million dollars was traded at the official Investors and Exporters Window on Thursday.
In their respective sovereign ratings release, Moody’s and Fitch are hoping to see a significant devaluation of the naira after 2023 election – citing external pressures and weak buffer.
Despite its stance to keep the naira strong, the Central Bank of Nigeria (CBN) market intervention has reduced compared to the pre-pandemic level. The shift comes even when foreign investors’ hot monies are practically lacking.
With the recent downgrades of Nigeria’s sovereign ratings to caat1 from B class by Moody’s, costs of borrowing from the international debt capital market is expected to increase.
Analysts told MarketForces Africa that the downgrade signals heighten risks of investing in Nigeria, thus foreign investors will demand a much higher risk premium. #Naira Gains amidst Uncertainties in Nigeria’s Economy
