Despite intervention in the FX market, the Nigerian naira concluded the day on a negative note, losing almost 12% daily. Since detractors of the Central Bank of Nigeria’s (CBN) willing buyer, willing seller FX strategy dispute, the exchange rate has been hidden from view despite FX sales to local banks.
Strong foreign exchange inflows are necessary to justify the monetary authority’s decision to allow the naira to float; otherwise, the local currency’s future would be unappealing, a Broadstreet analyst told MarketForces Africa.
The LSintelligence Associates research team warns against assuming that the naira can withstand a “willing buyer, willing seller” policy in currency exchange rates against the US dollar in a nation where there is no comparative cost advantage, forcing its citizens and businesses to rely on on imports.
Data from the FMDQ platform showed that the exchange rate ran amok against the US dollar at the Nigerian autonomous foreign exchange market to settle N1,484.75.
Investment firm, SAMTL limited, hinted in its market update that the apex bank intervened in the forex market without mentioning the amount. The central bank has been selling foreign currency to local deposit money banks to saturate liquidity level at the official market.
The FX market’s demand pressure today resulted in a 11.66% daily depreciation of the naira. On the other hand, exchange rate clawback losses in the parallel market.
At the informal currency market on Thursday, the naira strengthened by 2.06% to close at N1,425 per US dollar. In the global commodity market, WTI crude futures and Brent crude prices were at $78.62 and $82.89 per barrel, respectively.
