According to market data, Africa, the purchasing power of the naira fell further in the parallel market, while the exchange rate in Nigeria’s Autonomous Foreign Exchange Market recovered moderately.
As currency rates continue to bounce in both directions, hopes for robust rebalancing appear to have faded, with investment banking companies turning naira bearish in their 2024 forecasts.
The forex market performed mixed on Thursday, with demand for foreign currency outpacing market supply in the unorganized currency market. The Naira rose 3.13% versus the leading foreign currency, the US dollar, finishing at N902.08 per dollar on the official market, according to statistics from the FMDQ portal.
However, in the parallel market, the local currency experienced a 2.27% depreciation day-on-day, closing at N1,353 per dollar. MarketForces Africa tracked that some online wallets and fintech payment platforms like Chipper quoted US dollars above N1400 today.
Thus, Naira continued its nosedive course as FX demand could not be met at the official window. There is an expectation that the exchange rate will worsen in 2024 despite reforms targeted at boosting the purchasing power of the local currency, the naira.
The Central Bank of Nigeria (CBN) also moved to improve stability in the foreign exchange market by clearing a portion of the existing backlogs of matured Non-Deliverable Forwards (NDF), lifting the 8-year-long restrictions on some 43 items, allowing increased access to the official foreign exchange (FX) window.
Analysts maintained that clearing the existing FX backlog and meeting new legitimate FX demands would require additional sustainable inflows of FX into the reserve balance. In the global commodity market, prices of crude oil increased amidst an expectation of increased oil demand in the United States.
Market data revealed that West Texas Intermediate (WTI) crude futures edged up for a second session towards $73 a barrel. Brent Crude advanced above $78 per barrel on Thursday, amidst escalating tensions in the Middle East. OPEC’s latest monthly report projected a solid 1.85 million bpd increase in global oil demand to 106.21 million bpd by 2025.
Nigeria’s gross external reserves climbed to $33.196 billion following the moderate inflows record seen in January, data from the apex bank website showed.
