Naira Tumbles as Speculators’ FX Spread Hits 62%
The Nigerian continues to nosedive across the foreign exchange (FX) markets as hope for recovery begins to look impossible until the next official devaluation. At the Investors and Exporters window, the naira declined to ₦463.75 amidst an increase in demand for the United States dollar.
Also, the exchange rate in the parallel market worsened to ₦750, from N747 in the previous trading session. The exchange rate had printed at N742 per greenback before a fresh shift in the FX curve at the time when external reserves began to drop.
Hence, the FX spreads available to currency speculators widened to 62%. Total capital inflow into Nigeria dropped by 20.47 per cent to $5.32 billion in 2022 compared to $6.70 billion in the preceding year, the National Bureau of Statistics (NBS) said in a report.
In the fourth quarter of 2022, MarketForces Africa reported that capital inflows dropped by 8.53 per cent to $1.06 billion, compared to $1.15 billion in the preceding quarter.
Foreign investors’ apathy has kept foreign currency in the economy in a tight corner while the monetary authority battles worsening FX rates across the market.
Data from the Central Bank showed that gross external reserves depleted further to $35.41 billion, while Oil prices held firm above the $80 threshold. Naira Lost 11% as Banks Issue New Update on FX Spending
Market data from the oil trading platforms showed that Brent crude oil and Nigeria’s Bonny light closed at $84.9 and $84.7/barrel, respectively. Earlier in the week, at the official window for manufacturers, and exporters, the new exchange rate bracket worsened from the previous range.
The Naira depreciated against the dollar on Monday, exchanging for N463.50 at the investors’ and exporters’ window. The rate represents a decrease of 0.46 per cent when compared to the N461.38 it exchanged to the dollar at the close of business on March 31.
The open indicative rate closed at N461.80 to the dollar on Monday. A spot exchange rate of N466 was used for trading within the day before it settled at N463.50.The Naira sold for as low as N460 to the dollar within the day’s trading.
A total turnover of US$175.40 million was traded at the official Investors’ and Exporters’ window. This is in stark contrast to what happened in the Nigerian Autonomous foreign exchange fixing market at the weekend when the rate traded within the range of N459.5-466.0 but closed at N461.4.
The FX rate then pointed towards a depreciation of -0.01% or N0.05 week on week. In the forwards market, FX traded within the range of N453.0-453.5 to the United States dollar.
In the retail secondary market intervention sales (SMIS) market, the FX spot rate remained unchanged week on week at N462 on Friday. According to data from FMDQ, NAFEX turnover decreased by 41% to USD555.9 million.
The NAFEX window recorded an inflow of USD553.5 million with the CBN accounting for 28.5%, foreign portfolio investors (FPIs) accounting for 10.6%, non-bank corporates accounting for 45.2%, exporters accounting for 12.3%, and others accounting for 3.4%.
Analysts projected that the exchange rate will cross N500 at the window even if the apex bank insists on fighting a mini-currency war amidst the worsening FX crisis in Africa’s largest economy. #Naira Tumbles as Speculators’ FX Spread Hits 62%
