Naira falls across FX markets as dollar inflow decline

The naira on Tuesday depreciated against the dollar across the official and the unofficial foreign exchange (FX) markets following a decline in dollar inflows last week.

The naira depreciated slightly by 0.3 percent or N4.90 as the dollar was quoted at N1,532.94 on Tuesday compared to N1,528.03 quoted on Monday at the Nigerian Foreign Exchange Market (NFEM), data from the Central Bank of Nigeria (CBN) indicted.

Currency dealers quoted the dollar at the highest rate of N1,549.50, stronger than N1,552 quoted the previous day. The market recorded the lowest rate of N1,522.70, lower than N1,512 closed on Monday at the NFEM.

The official FX market window recorded an inflow of US$1.0bn last week, marking a 25.4 percent decline compared to US$1.34bn recorded in the prior week, according to a report by Coronation Asset Management.

At the parallel market, popularly called black market, the Naira closed at N1,580, representing N5 loss compared to N1,575 closed on Monday.

Against other currencies, the naira appreciated by N10 as the Pound was quoted at N2,040 on Tuesday as against N2,050 on Monday. The local currency closed steady at N1,700 per Euro and N1,150 per Canadian dollar. The Chinese Yuan traded at the rate of N1215, in the black market.

Read also: Naira recovers as demand for dollar moderates in black market

An explosion has struck the Trans-Niger Pipeline, one of Nigeria’s largest oil pipelines, causing significant disruption and raising concerns about environmental damage and economic losses.

This, analysts and currency dealers fear, would threaten the stability of the naira in the Nigerian foreign exchange market.

Additionally, Nigeria’s oil sector is facing headwinds as 12 March-loading crude cargoes remain unsold, highlighting weak demand for the country’s exports.

Traders reported that as of 10 March, buyers for these cargoes were still being sought, with much of the April export schedule also available, according to data from Argus.

The oil market experienced significant volatility on the back of concerns of weak demand, rising trade tensions between the US and key trade partners, and OPEC+ production quota increase, according to a report by Afrinvest Securities Limited. Against this backdrop, Brent crude price fell 2.4 percent week/week to $70.82/bbl from $72.49/bbl previously.