Nigeria’s currency on Wednesday depreciated by 0.66 percent to N401.04k, lowest since January 4, 2021, at the Investors and Exporters (I&E) forex window due to shortage of dollars.
Naira was quoted at N398.42k during intraday trading on Tuesday. After trading on the same day the foreign exchange market closed with Naira losing 0.63 percent to close at N401.00k as against N398.50k closed on Monday, data from the FMDQ revealed.
The daily foreign exchange turnover declined further by 15.07 percent to $49.07 million on Tuesday compared to $57.78 million recorded on Monday.
Uche Uwaleke, professor of the capital market and president, Capital Market Academics of Nigeria, said, this must be speculation-induced because the external reserve is rising gradually on the back of the increase in crude oil prices.
The IMF Directors have just released their report on Nigeria where they advised the CBN to unify Exchange rates.
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So, the IMF is mounting pressure on Nigeria to devalue the naira especially when the Fund believes that the domestic currency is overvalued citing the wide premium between the I & E window and the parallel market rates and the huge unmet forex demand.
Don’t forget that Nigeria borrowed $3.4 billion from the IMF recently and forex market liberalisation was a condition, he noted.
Based on this, many people already believe that the CBN will have no choice but to devalue the naira sooner than later.
“So, I think the current demand is speculative and influenced by the need to have the US dollar as a store of value,” Uwaleke said.
The local currency steadied at N480 and N478 per dollar on the black market and Bureau De Change (BDC) segment of the FX market.
