Naira Reclaim 21% amidst Worrisome FX Market Volatility
The Naira appreciated by 21.36% at the official currency market where the exchange rate closed at N864.29 per dollar on Monday from N1,099.05 on Friday, data from the FMDQ platform reviewed by MarketForces Africa show.
The Naira bear has persisted amidst falling external reserves and a decision by the apex bank to leave the exchange rate to be determined by the forces of demand and supply.
Unfortunately, the Nigeria Autonomous Foreign Exchange market has become very volatile given the large daily movement in rates. Large daily swings have started to become a norm in the forex market.
In a swoop, the local currency lost more than 30% on daily transactions on Friday. Seeking a correction, the exchange rate gained more than 21% in favour of the local currency on Monday.
Analysts told MarketForces Africa that the large daily movement in rates signposts a weak FX outlook for a nation that relies heavily on imports with lower FX inflows to act as a shock absorber.
However, in the parallel market, the Naira depreciated by 1.86% to close at N1,207 per dollar due to sustained demand for the US dollar amidst the expectation that Nigerians in diaspora remittance will saturate the supply side.
In the global commodity market, oil prices showed a negative trend, with Brent Crude declining by 0.51% to trade at $75.45 per barrel and WTI also declining by 0.35% to trade at $70.98 per barrel on Monday. Nigeria’s external reserve remained below $33 billion, according to data from the Central Bank website.
On the economic side, analysts said they are less optimistic about the outlook for Nigeria, citing higher rates and risks of more persistent inflation mean a tighter grip on households. #Naira Reclaim 21% amidst Worrisome FX Market Volatility