Naira Sheds Value on Overdose FX Demand
Naira falls across foreign currencies markets due to overdose foreign currencies (FX) demand by manufacturers and other users that cannot access dollars for school payments and other miscellaneous needs in the invisible category.
Demand for the US dollar continues to grow as some foreign airline sells air tickets in foreign currencies, an approach adopted by operators to combat or outrightly eliminate fund repatriation risk from the Nigerian market.
The Central Bank of Nigeria has kept to its capital control measures to protect the local currency from falling freely across the FX markets. But Africa’s largest economy is not getting enough dollars from exports on the back of low country’s comparative production advantage and lower agricultural produce for exports. READ: Naira Sheds Value on Maturing Political Uncertainties
Oil still accounts for a significant chunk of foreign receipts at the time developed economies are moving policy near zero emissions. At the Investors and Exporters foreign exchange window, the local currency depreciated further on Wednesday amidst alleged diversion of foreign currencies receipts by exporters.
Trading data from FMDQ Exchange tracked by MarketForces Africa shows that the Naira depreciated to N436.50 per the United States dollar at the Investors and Exporters FX window. The decline in the exchange rate translates to a 0.06 per cent depreciation compared to the N436.25 for which the dollar exchanged on Tuesday.
Currencies traders stated in market reports that the open indicative rate closed at N44. 75 to the United States dollar on Wednesday amidst a disequilibrium market position. It was noted that an exchange rate of N438 to the dollar was the highest rate recorded within the day’s trading before it settled at N436.50.
Market data shows that the Naira sold for as low as N425 to the dollar within the day’s trading. A total of 133.97 million US dollars was traded at the official Investors and Exporters window on Wednesday.
In the Bureau de Change market, exchange rates were mixed with different spot rates – exchange rates range from N706 to N707, according to channel checks conducted by MarketForces Africa.
Large numbers of Nigerians were in the market to get dollars for their private uses – coincidentally, some banks announced they will stop customers from using their debit cards for online purchases.
According to a figure from the Central Bank, Nigeria’s external reserve prints steady at about $39 billion as oil export receipts decline following lower production volume.
The Organisation of Petroleum Exporting Countries said in a report Nigeria’s production volume dropped below one million barrels per day. # Naira Sheds Value on Overdose FX Demand
