Nigeria’s currency, Naira, fell to its lowest at N434.7 per dollar at the Investors and Exporters (I&E), the country’s official foreign exchange market window.
After trading on Monday, Naira depreciated by 0.75 percent to N434.75/$ compared to N431.50 quoted on Friday at the official market, data from the FMDQ indicated.
Naira depreciation has been attributed to dollar shortage as Nigeria continues to struggle with diversifying and improving foreign exchange inflows.
With the current rate, Naira has depreciated by 2.93 percent from N422 quoted on the first trading day this year.
Most foreign exchange dealers who participated at the FX auction on Monday maintained bids between N425.00 (low) and N437.50 (high) per dollar.
At the parallel market, popularly called the black market, Naira stood at N702 par dollar after trading on Monday.
The local currency has depreciated by 19.51 percent at the black market from N565/$ at the beginning of the year.
Last week, Naira traded in a relatively calm manner at the parallel market segment to close the week flat at N700/$ as panic buying continues. It was a marginally negative close for the local currency at the I&E window of the market as panic buying continues to take center stage despite the $265 million FX inflow from the Central Bank of Nigeria (CBN)’s vault majorly to airline operators in order to repatriate trapped revenues in Nigeria,” a report by Cowry Asset Management Limited said.
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According to the report, the naira depreciated by (0.27%) N1.17 week on week to N431.50/$ from N430.33/$ in the prior week as FX users and traders continue to experience shortages within the market and forcing traders to reserve their greenback holdings for a future date as the CBN continues ignoring traders while it maintains its intervention in the market. Thus, most market participants maintained their bids between N417/$ and N437/$.
At the Interbank Foreign Exchange market, Naira/dollar exchange rate closed flat at N430.00// amid CBN’s weekly injections of over $200 million where $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $50 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles.
Naira/dollar exchange rate in the Naira FX Forward Contracts Markets inched higher across all tenors, safe for the 12 months contract which closed the week in the opposite direction at N477.74/USD from N478.51/USD.
However, the 1 month, 2 months, 3 months and 6 months tenors all rose by 1.26 percent, 1.19 percent, 0.93 percent, and 0.27 percent respectively to close the week’s offering at N434.44/$, N437.68/$, N440.19/$, and N452.58/$.
The Bonny light crude price depreciated by $7.95 (-7.6%) w/w to close the week at $97.0 per barrel from $104.95 per barrel in the previous week.
“We expect the Naira to trade in a relatively calm manner band across all segments barring any significant market distortions as the CBN continues its weekly FX market interventions,” analysts at Cowry Asset Management said.
