Naira Sheds Value, Black Market Rate Worsens to N700
As external reserve inched close to $39 billion, the Nigerian naira falls to N430.33 at the Investors’ and Exporters’ foreign exchange (FX) window, selling at N700 in the parallel market.
The worsening rate signal higher demand amidst a lower supply of foreign currencies for transactions. MarketForces Africa reported that at the investors’ window last week, the exchange rate was N429.05 to a greenback.
Thus, most market participants maintained bids between N417 and N444, according to traders’ notes. Also, there was sustained demand pressure in the black market which pushed the exchange rate to N700 from N686 to a United States dollar.
Large numbers of companies in the manufacturing sector reported foreign exchange loss in the second quarter of 2022, due to swings in bid rates. Data from the Central Bank shows that Nigerian gross external reserves printed at $38.947 billion following fresh inflows, from $38.912 billion a week earlier.
The scarcity of dollars in the local economy has continued to impact the exchange rate, widening the gap between the official window and parallel market rates – thus creating speculative opportunities for arbitrageurs.
At the Interbank Foreign Exchange market, the exchange rate closed flat at N430.00 per US dollar as the Central Bank of Nigeria (CBN) intervenes with $210 million.
Of the sum, $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles.
Elsewhere, rates on forward market contracts strength across all tenors. One month contract gains 0.12% to N429.02 per dollar while two months contract strengthens 0.34% to N432. 52 per dollar.
The dollar rate for three months forward contracts rally at 0.31% while six months contracts gained 0.32% to N436.15 and 451.35 per dollar. 0ne year contract gained 0.55% to N478.51.
In a market note, analysts at Cowry Asset Management said Nigeria’s FX crisis continues to worsen, hampering economic activities and brewing a bleak outlook for the currency. READ: Naira Slides at Investors Window, Black Market Steadies
FX users continue to experience shortages within the market and forcing traders to reserve their greenback holdings for a future date as the CBN continue ignoring traders, analysts said.
“We expect the Naira to trade in a relatively calm manner band across all segments barring any significant market distortions as the CBN continues its weekly FX market interventions”, Cowry Asset projected. #Naira Sheds Value, Black Market Rate Worsens to N700
