Naira Sinks at Investors Window, Parallel FX Rates Worsen
The Nigerian local currency, naira, loses value in both the official foreign exchange window and the Central Bank of Nigeria (CBN) rejected parallel market over demand pressures amidst foreign currencies scarcity.
At the investors and exporters foreign exchange window, naira depreciated by about 0.3% to N419.50 for one United States dollar. The fresh depreciation of the local currency started early this week, it traded at N418.33 on Wednesday.
Market data shows that the open indicative rate closed at N417.81 to the dollar on Thursday while the exchange rate of N444 to the dollar was the highest rate recorded within the day’s trading before it settled at N419.50.
The Naira sold for as low as N410 to the dollar within the day’s trading. A total of $124.85 million dollars was traded in foreign exchange at the official Investors and Exporters window on Thursday.
In the parallel market, the exchange rate has worsened to N601, according to FX traders and some Bureau de Change hint that they are unable to even meet demand.
Analysts told MarketForces Africa that naira may be devalued again as accretion into external reserve has slowdown despite high oil prices. Africa’s largest economy has been unable to meet the oil group quota due to lower production capacity.
The inability which government attributes to years of neglect in oil infrastructure has worsened fiscal slippage. Apart from that, subsidies payment has inched up to N4 trillion due to an imbalance in the oil supply chain.
Nigeria spends billion to import refined crude oil for local uses while the nation exports raw unrefined crude for exports earnings.
The Central Bank of Nigeria has however maintained a stance that the policy authority will not devalue the local currency. Though, the naira has been on self-devaluation in the foreign exchange markets.
Multiple exchange rates have persisted despite foreign interest complaints against the multi-tiered interest rate regime of the Central Bank of Nigeria. #Naira Sinks at Investors Window, Parallel FX Rates Worsen
