The pressure on the naira/dollar exchange rate continued on Friday as Nigeria’s currency fell to N482, the lowest since August 2020, on the black market.
Data from the BusinessDay exchange rate monitor show that the cost of dollar peaked at N480 in August before crashing to N430 on September 2, 2020, on the news that the Central Bank of Nigeria (CBN) would resume dollar sales to the Bureau De Change (BDC) operators on September 7.
The foreign exchange market has been under pressure since March 2020 following a sharp drop in oil prices as a result of the Covid-19 pandemic.
At the BDC segment of the FX market, the naira also weakened by N1 as the dollar traded at N478 on Friday compared to N477 traded the previous day.
Naira depreciated by N0.33k at the Investors and Exporters (I&E) forex window as the dollar was quoted at N385.83k compared to N385.50k quoted on Thursday, data from the FMDQ indicated.
The slump in crude oil prices as a result of the COVID-19 pandemic affected foreign exchange inflows to the economy.
Consequently, aggregate inflow to the economy in the first half of 2020 at US$60.13 billion, fell by 17.8 percent from US$67.34 billion in the preceding half-year and 10.7 percent, relative to US$73.12 billion in the first half of 2019, the CBN’s economic report for the first half of 2020 showed.
A breakdown showed that inflow through autonomous sources at US$35.29 billion accounted for 58.7 percent, while the CBN was US$24.84 billion or 41.3 percent.
A disaggregation of inflow through autonomous sources showed that: invisible purchases amounted to US$33.92 billion; non-oil export receipts, US$1.36 billion; and external account purchases, US$0.02 billion, indicating a decline of 24.2 percent, 45.6 percent, and 12.8 percent, compared with their respective levels in the second half of 2019.
Of the total invisible purchases, ordinary domiciliary accounts and over the counter (OTC) purchase amounted to US$9.48 billion and US$24.43 billion during the review period.
A disaggregation of the OTC purchases showed that capital importation amounted to US$8.13 billion, while home remittances were US$0.84 billion. Other OTC purchases amounted to US$15.46 billion.
Foreign exchange inflows through the CBN showed that crude oil receipts declined by 16.0 percent to US$6.62 billion, compared with the level in the preceding half-year. The development attributed to the drop in crude oil as a result of weak global demand.
Non-oil receipts, on the other hand, increased by 1.4 percent to US$8.22 billion, compared with the level in the second half of 2019. This was due to proceeds from government debt in the form of emergency financial assistance of US$3.36 billion, received from the International Monetary Fund (IMF), under the Rapid Financing Instrument, to cushion the effect of the COVID-19 pandemic. Other non-oil receipts included: TSA and third-party receipts, US$3.56 billion; foreign exchange purchases, US$2.54 billion; returned payments (Wired/Cash), US$0.24 billion; recovered funds, US$0.31 billion; and DMBs cash receipts, US$3.03 billion.
Others include Interbank swaps, US$2.18 billion; other official receipts, US$1.39 billion; unutilised funds from foreign exchange transactions, US$0.62 billion; unutilised International Money Transfer Operator (IMTO) receipts, US$0.61 billion; and interest on reserves and investments, US$0.37 billion.
