As US dollar supply trailed below FX demand by qualified users in the autonomous market, the Naira saw a significant drop in buying power at the official market. Despite the monetary authority’s repeated efforts to stabilize the local currency, the situation in the FX market is still not great.
As the exchange rate declined by 2.08% to N1,615.94 per US dollar, data from the FMDQ platform—which offers daily spot prices on currencies transacted at the official window—suggested that the naira was weaker in the market.
In contrast, the parallel market saw a 2.46% increase in the currency rate, which closed on Tuesday at N1,588 per US dollar. There is now a N28 difference between the official and black market prices.
Since security agencies combative measures at the black market, the exchange rate has been improving. FX whales have gone underground having noted the authority will leave no stone unturned to save the local currency.
Large US dollar holders have kept their hands tight on forex to keep the naira under pressure perpetually.
For years, Nigeria has not been able to meet eligible demand for foreign currencies due to the activities of speculators and insiders who continue to make extra ‘bucks’ from illicit currency trading.
The Central Bank recently fingered local banks for infractions, which later resulted in a directive to reduce lenders’ net open position drastically. It was gathered that banks were among those speculating against the naira, boosting the US dollar’s dominance in the market.
In its latest expose, the CBN said a large amount of untraceable FX inflows of more than $26 billion passed through Binance Nigeria. According to analysts, the amount is large enough to kill a local currency since it flows into an underground economy via peer-to-peer cryptocurrency exchange,
Binance, a cryptocurrency trading platform that allows peer-to-peer trading, thus, becomes a shadow economy to channel foreign currencies from Nigeria for various untraceable deals.
In the global commodities market, oil prices experienced a rise on Tuesday, driven by market focus on uncertainty surrounding a potential Gaza ceasefire and expectations of OPEC+ extending voluntary supply cuts in March.
International benchmark Brent crude futures inched up to $83.01 a barrel, while U.S. West Texas Intermediate crude futures (WTI) reached $78.26 per barrel in the global commodity market.
