Naira Sinks Deep, Official, Parallel Market Rates Worsen
The Nigerian naira depreciated significantly on Tuesday, losing 6.86% as traders downplayed the announcement of $10 billion in inflows into the economy in the coming weeks. Analysts said a major challenge facing the local currency is the scarcity of US dollar inflows.
Foreign currency shortage widened the gap between forex demand and supply across the market, a development that created a disequilibrium position for the naira due to sustained demand for imports, and other foreign currency denominated payments.
On Monday, Wale Edun, finance minister told Nigerians that the government is expecting an inflow of $10 billion to hit the system in the coming week. Consequently, the local currency reclaimed value, though the exchange rate at the parallel market refused to shift.
Even with the expected inflows, the naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, closing at N847.77 per US dollar. A similar development was witnessed in the open market despite a decision to lift FX bank on 43 items.
In the parallel market, the Naira took a further beating on Tuesday by 4.55% as demand pressure continued to bite harder on the back of little or no dollar supply, closing at a new low of N1,265 against the US dollar.
External Reserves steadied around $33.25 billion, covering about seven months of imports. In the oil market, there was a twist in market direction amidst conflict in the Middle East. Brent crude is down 0.88% to $89.04 per barrel. Similarly, West Texas Instrument (WTI) crude fell by 1.00% to $84.64 per barrel. #Naira Sinks Deep, Official, Parallel Market Rates Worsen