• Monday, March 04, 2024
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BusinessDay

Naira falls sharply by 0.8% as parallel market demand rises

Dollar nears N1,500 as scarcity hits black market

The foreign exchange market on Wednesday recorded a sharp fall in the value of naira following increased demand for dollars by importers at the parallel market, also known as the black market.

After trading on Wednesday, naira depreciated by 0.80 percent to N744 per dollar as against N738/$ since last week at the unofficial market.

The demand for the dollar was mostly from importers, particularly, from those who deal in oil and gas and who could not access foreign exchange from the official market, according to a parallel market operator.

Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said on Tuesday that dollars repatriated through the RT200 programme has increased by 40 percent in one year.

Available data shows that repatriation due to the programme increased by 40 percent from $3billion in 2021 to $5.6 billion at the end of 2022.

Read also: How Naira redesign and its aftermath affect free trade in Nigeria

“The RT200 programme has made good progress in export proceeds since its establishment in February 2022. The momentum for 2023 is equally showing strong numbers and impressive prospects,” Emefiele said.

He said in the first quarter of 2023, a total of $1.7 billion was repatriated to the economy while about $790 million was sold at the Investors and Exporters (I&E) forex window year-to-date. The balance of the proceeds remained in the export domiciliary accounts of exporters.

Nigeria’s external reserves, which gives the CBN the firepower to defend the naira, have declined to $35.23 billion as of May 9, 2023.

“Do you know the number of people who request a dollar for school fees, Travel Allowance (BTA), and Personal Travel Allowance (PTA)? Yet NNPC has not brought dollars since February last year,” a top official at the CBN said.

Naira also depreciated by 0.17 percent as the dollar was quoted at N463.02 on Wednesday as against the last close of N462.25.

Most currency dealers who participated at foreign exchange market auction on Wednesday maintained bids between N446 (low) and N466 (high) per dollar.

At the money market, the Overnight (O/N) rate increased by 0.05 percent to close at 11.38 percent on Wednesday as against the last close of 11.33 percent on Tuesday, while the Open Repo (OPR) rate remained unchanged at 11.00 percent.

The Nigerian treasury secondary market closed on a positive note on Wednesday with the average yield across the curve decreasing by 44 bps to 7.09 percent from 7.53 percent on the previous day, according to a report by the FSDH research. Average yield across the long-term maturities declined by 65 bps. However, the average yields across short-term and medium-term maturities remained unchanged at 5.53 percent and 6.33 percent, respectively. The Nigerian Treasury bill for November 9, 2023 (NTB 9-Nov-23 (-169 bps) maturity bill witnessed maximum buying interest.

At the Primary Market Auction held on Wednesday, the CBN offered NT-bills maturities worth N143.98 billion across 91-day (N4.52 billion), 182-day (N5.44 billion), and 364-day (N134.02 billion) tenors.