Naira Sags as US Dollar Scarcity Upsets Rate Redirection
The Nigerian naira sagged for second trading sessions in the official FX market due to scarcity of US dollars. The naira has started downward pricing amidst irrepressible FX liquidity challenge in the market.
Foreign currency demand has further eclipsed US dollar volume at the autonomous FX window, despite the Central Bank of Nigeria’s (CBN) efforts to redirect exchange rate direction under its willing buyer, willing sellers policy.
In what appears to be an intermittent distortion to real exchange rate equation, the market has taken up FX sales sold to requesters via the CBN’s Retail Dutch Auction System without lasting impacts.
This market revelation calls into question the CBN’s stance not to defend the local currency. Despite the huge US dollar spent to buy the naira to regain balance, analysts said the amount may not be insufficient to boost exchange rate after all.
In the official market, the naira weakened against the US dollar, depreciating by 0.25% to ₦1,586.04 per US dollar on Wednesday. It is not clear if the CBN has initiated process for its retail FX auction for the week.
The apex bank has not come up with its FX policy timing. However, before the CBN relaunched its retail Dutch auction sales last week, it had been buying the naira from or selling the US dollar to authorized dealer banks each week.
The naira exchange rate is steady at average of ₦1,585 per greenback in the parallel market, as trading activities ended on a quiet note.
In the global commodity market, Brent crude fell by 0.31% to $80.44 per barrel, and West Texas Intermediate (WTI) crude declined by 0.46% to $77.99 per barrel.
WTI futures extended their losses for the second consecutive day following an unexpected rise in U.S. crude oil stocks reported by the EIA. #Naira Sags as US Dollar Scarcity Upsets Rate Redirection
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