Naira Sees Large Daily Depreciation, Official Touch Likely
With its largest daily loss, the naira depreciated by 25.81% to N993.82 per US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The latest price down looks like another official depreciation of the local currency.
The apex bank has lost touch with the management of the local currency as demand for the US dollar continues to spike. Foreign currency scarcity has worsened to a level that the apex bank’s immediate response may be needed, analysts told MarketForces Africa in a phone call.
In the past three weeks, the external reserve has been gaining weight from foreign currency inflows, though sources remain unknown; there is a feeling that an increase in oil production volume is driving the growth.
On the contrary, in the parallel market, the Naira’s performance was positive as it appreciated at the close of trading on Monday by 5.60%. The local currency closed at N1,180 per dollar from the previous sessions’ N1,250 per dollar.
Foreign currency traders are projecting a possible collapse of the exchange rates gap as official and parallel market rates begin to shift. While the official rate has been depreciating, the parallel market rate has been appreciating over the last few days.
Nigerians are using large bags of US dollars for conducting various personal and business transactions while earning so much less from crude oil sales.
In the commodity market, the price of crude oil experienced a slight decline, with Brent crude falling by 2.18% to trade at $88.51 per barrel. Also, the West Texas Intermediate (WTI) crude oil dropped by 2.68% to trade at $83.25 per barrel.