Due to a sustained increase in demand for US dollars by qualified participants in the Nigerian independent foreign exchange market, the value of the naira declined further on Tuesday. The official daily quotation of FMDQ Securities Exchange shows that the local currency in Nigeria closed at ₦1,476.95, down 0.06% against the US dollar.
In a similar vein, as demand for foreign currency rose among users of invisible foreign money, the exchange rate in the parallel market declined by 0.69%, to settle at N1,455 per US dollar. The naira saw negative trading activity in May across a range of forex divisions. At the official market, it lost N95.03, or 6.40%, month over month, to close at N1,485.99 to the dollar.
The opening exchange rate for the month of May was N1455.59 to the US dollar. The persistent rise in foreign exchange demand relative to the shortage of the CBN plunged the exchange rate to an abysmal level.
The market witnessed US dollar liquidity shortage across the segment in the currency market last month. The local currency also declined by 6.29%, or N90.00, per month in the parallel market, closing at N1,430 to one US dollar.
Last week, in a fast and furious manner, the apex bank conducted forex sales ahead of $1.3 billion non-deliverable forwards that matured. Despite this, the depressed local currency moved slowly against the US dollar.
The weak net external position has caused a slowdown in FX market intervention. Data from CBN showed that gross external reserves closed at $32.694 billion in May amidst tight FX inflows and increased demand for foreign currency by eligible users.
In the global commodity market, oil prices continue to trade downward as bearish sentiments build due to OPEC+ underwhelming the market with its plan to phase out production cuts over the next 12 months gradually.
