Naira records all-time fall against dollar at official market

Naira, Nigeria’s legal tender on Tuesday recorded an all-time depreciation against dollar at the official market known as the Investors and Exporters (I&E) forex window, as the shortage of foreign exchange persists.

After trading on Tuesday, naira closed at N430 per dollar, lowest ever. This represents a one percent loss against N425.75/$ closed on the previous day at the I&E window, data from the FMDQ has revealed.

Most foreign exchange market dealers who participated in the auction on Monday maintained bids at N413.40 (low) and N444 (high).

At the parallel market, also known as the black market, the naira strengthened by N1.00 to close at N614 per dollar compared to N615 opened on Monday morning.

Nigeria’s external reserves, which give the Central Bank of Nigeria (CBN) the muscle to defend the naira, have declined by 3.0 percent year to date to $39.25 billion as of July 4, 2022, from $40.5 billion recorded at the beginning of the year.

Since the approval of the US$3.35 billion Special Drawing Rights (SDRs) by the International Monetary Fund (IMF) in August 2021 and the issuance of Eurobond in September, external reserves have trended downwards, according to the first quarter 2022 report of the FSDH Research, an arm of FSDH Holding Company Limited.

Lower oil production below the budgeted benchmark despite high crude oil price led to limited foreign currency inflows needed to boost the reserves.

The economy recorded lower net foreign exchange inflow in January, driven, mainly, by net flows from the CBN and autonomous sources, the CBN’s economic report for January 2022 stated.

Aggregate foreign exchange inflow into the economy declined by 36.7 percent to US$4.36 billion in January 2022, from US$6.89 billion in December 2021.

The total foreign exchange outflow decreased by 5.1 percent to US$3.41 billion, from US$3.59 billion in the preceding period. A net inflow of US$0.95 billion was recorded in the month under review, compared with net inflow of US$3.29 billion in the preceding period.

At the money market on Tuesday, the Overnight (O/N) rate remained unchanged at 14.00 percent, while the Open Repo (OPR) increased by 0.17 percent to close at 14.00 percent as against the last close of 13.83 percent.

The report from the FSDH noted that the Nigerian Treasury Bills secondary market closed on a negative note on Tuesday with the average yield across the curve increasing by 75 bps to 6.48 percent from 5.73 percent on the previous day.

Average yield across the short-term maturities expanded by 280 bps, while average yield across the long-term maturities declined by 2 bps. However, average yield across medium-term maturities remained unchanged at 5.16 percent. NTB 11-Aug-22 (+305 bps) maturity bill witnessed maximum selling pressure, while NTB 8-Jun-23 (-53 bps) maturity bill witnessed buying interest.

At the Open Market Operation (OMO) bills secondary market closed on a negative note on Tuesday, as the average yield across the curve cleared higher by 35 bps to close at 6.12 percent from 5.77 percent on the previous day. Average yield across the short-term maturities expanded by 178 bps. However, the average yields across medium-term and long-term maturities remained unchanged at 5.18 percent and 5.79 percent, respectively. OMO 16-Aug-22 (+178 bps) witnessed heavy selling pressure.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.