Naira Loses Its Shine at N1,490 Per US Dollar
In the hot midday trading session, the Nigerian local currency, the Naira, spirals downward as a decision to float backfires. The exchange rate hit near N1400 at Nigeria’s autonomous FX market on Monday due to tightened forex supply in the space.
At the current moment, Nigeria’s naira fell to a record low of 1,490 per dollar on the official market on Tuesday, LSEG data showed, after the currency suffered losses on the forwards market.
Four months ago, the apex bank floated the local currency by stopping weekly forex market intervention while demand skyrockets. Naira bears however continue to grow in the economy with projections pointing that the official exchange rate would cross N1,000
On exchange rate policy, the World Bank said in a report that additional measures can be taken to increase market stability. The CBN has reaffirmed its commitment to the WBWS mechanism, yet liquidity in the official (NAFEM) market has remained thin.
Further monetary policy tightening is expected to help underpin the value of the naira. However, there is also a need to increase FX supply in the market.
Facilitating FX flows, especially from all exports, through the NAFEM can help provide additional volumes in the official window that can help provide stability.
In addition, clarity on the CBN’s net reserve position, and on the CBN’s continued progress in clearing the FX backlog, would also strengthen market confidence
Selloffs Push Nigeria Treasury Bills Yield to 8.3%
