Naira Slides Amidst Dry Remittance from Diaspora
The Nigerian local currency, the naira, slid again on Tuesday after recovering from a large daily foreign currency demand shock in the previous week. The exchange rate had set a new range for price action after it crossed N1,000 at the Nigeria Autonomous Foreign Exchange Market (NAFEM).
The market expects year-end remittances from Nigerians in the diaspora to saturate the foreign currency market. However, there appears to be a swing in the pattern observed over the past years.
Instead of rates coming down at the black market on an expectation that some Nigerians would seek to exchange US dollars, and other foreign currencies to naira. The parallel market has seen sporadic increases in forex demand instead, casting doubt on a projection that the local currency will regain balance in 2023.
Data from the FMDQ FX OTC platform showed that the Naira depreciated by 0.09% at the official market to close at N865.03 per dollar from N864.29. Similarly, in the parallel market, the Naira also depreciated by 2.32% to close at N1,235 per US dollar due to sustained demand for buckets of foreign currencies.
Still, Nigeria’s foreign reserves remained tight below $33 billion, according to data from the Central Bank website. The gross external reserve has seen low accretion from forex sources but the government plans some foreign currency raise.
While the timing isn’t clear yet, there is a probability that the debt office could make the move in the first quarter of 2024 after President Bola Tinubu sought approval from lawmakers. >> Naira Devaluation Deepens Economic Crisis in Nigeria
In the global commodity market, oil prices showed a negative trend, with Brent Crude declining by 2.87% to trade at $73.85 per barrel and WTI also declining by 3.08% to trade at $69.13 per barrel on Tuesday. #Naira Slides Amidst Dry Remittance from Diaspora