As the official exchange rate declined to N956 to the US dollar, dealers and stakeholders in the financial markets wished the Nigerian a fond farewell, according to statistics cited by the FMDQ platform. The local currency has broken a fresh red line against the US dollar, which is the dominating currency, according to latest trade statistics.
The deteriorating official rate is approaching the parallel market, indicating that the June devaluation was not executed correctly as the market starts to find a new equilibrium. Nevertheless, it looks like exchange rate convergence may be accomplished.
Data indicates that because of an imbalance in supply and demand in the official window, a big FX spread that speculators had been enjoying decreased dramatically as rates on the parallel and official markets drew closer together.
Data from FMDQ showed that the naira depreciated by 13.78% to N956.33 per US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM). Nigeria’s forex markets have been flying blind with an acute shortage of US dollars and other foreign currency.
In the parallel market, the Naira’s performance remained subdued, depreciating by 0.17% day-on-day to close at N1,152 per dollar. Exchange rates worsened as heightened demand for the greenback overwhelmed FX supply.
However, the gap between exchange rates collapsed below N200. Data from the Central Bank of Nigeria showed that external reserves remained tight at around $33.4 billion. A recent report showed that Nigeria’s oil production has increased, while global market price remained ahead of the budget benchmark.
Oil prices have come under pressure recently. Brent Crude traded at $80.44 per barrel and WTI at $75.53 per barrel. This decline was influenced by OPEC+ delaying its meeting and a notable build in U.S. crude stocks according to the latest EIA oil inventory report.
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