Naira Value Falls Despite Nigeria's Fresh US Dollar Inflow

Naira Value Falls Despite Nigeria’s Fresh US Dollar Inflow

The Nigerian naira gave up the fight to claw back losses sustained against the dominant US dollar across the foreign exchange markets despite a moderate foreign currency (FCY) inflow into external reserves.

According to foreign currency movements record tracked by MarketForces Africa, Nigeria received a $331 million inflow, boosting its gross position to $33.954 billion. The Central Bank of Nigeria (CBN) officially opened its price verification portal for FX users’ registration.

According to local deposit money banks, the portal would serve as a prerequisite for foreign currency processing, and sales to customers that meet prescribed requirements –including tax clearance certificates.

Traders said the Naira weakened further against the US dollar both at the official windows, Exchange rate depreciated to N762.71 at the investors and exporters FX window, from N738.18.

As currency speculators consolidate their positions amidst the widening gap between official and open market rates, FX users channelled requisition for forex to the parallel market, causing the local currency to depreciate further.

In the parallel market, the exchange rate depreciated by 0.54% to N925. FX scarcity amidst rising demand places untold pressures on the Nigerian naira as a result of low receipts from crude oil exports.

In the global market, crude oil prices rose on Thursday, with Brent crude up 1.17% to $86.24 per barrel and West Texas Instruments (WTI) crude up 1.60% to $82.94 per barrel.

The gains were driven by an improved demand outlook following a huge US crude inventory draw of 10.6 million barrels, above a total of 3.3 million barrels expectation set by the market.

Additionally, there are growing expectations that OPEC and its allies will agree to extend their production cuts. 

Nigeria’s sovereign dollar bonds fell by as much as 2.4 cents on Thursday, Tradeweb data showed, as markets reacted to reports that a $3 billion loan to state oil company NNPC was in limbo.

The 2038 maturity fell by the most, losing 2.4 cents, but its other U.S. dollar bonds also slid by more than 2 cents, Tradeweb data showed. #Naira Weakens Despite Nigeria’s Fresh US Dollar Inflow