Nigeria’s currency weakened further in the parallel market segment on Tuesday. The greenback exchanges for N498, representing a loss of N3 or 0.60percent as demand for dollar continues to rise.
As at 2.25 pm on Tuesday, dealers bought dollar for N493 and sold same for N498 as demand pressure increases compared with N491 which they bought on Monday and sold at N495.
The continued depreciation of the Naira on the parallel market follows the recent adoption of the Nigerian Autonomous Foreign Exchange (NAFEX) of N410.25k as official exchange rate by the Central Bank of Nigeria (CBN).
The significant depreciation in the parallel market is driven by the habitual reaction of market participants to the CBN’s decision to recognize the NAFEX rate as the official exchange rate.
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The record further depreciation of the naira negates expectations that it will remain stable this week. Oil prices rose on Tuesday, with Brent hitting $71 and trading at its highest since March, on expectations for growing fuel demand during the summer driving season in the United States. Brent crude futures for August gained $1.76, or 2.5percent, to $71.08 a barrel by 1228 GMT. U.S. West Texas Intermediate crude for July was at $68.55.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are currently meeting today (Tuesday). Expectations are that they may agree to continue a slow easing of supply curbs.
At the I&E FX Window of the FMDQ Securities Exchange, the opening indicative rate as at Tuesday, June 1, 2021 was N411.11/$ against closing price of N420/$.
The foreign exchange (FX) trading week which ended last Friday had seen Nigeria’s currency weakened by 1.85 percent as the dollar was sold for N495 compared to the opening rate of N486 per dollar on the black market.
