Nigeria’s indigenous currency, the naira, fell daily by over 13.3% in the foreign exchange (FX) market due to the clear FX liquidity issue that has been there since last month.
Yesterday, the Nigerian independent foreign currency market saw a dramatic increase in the value of the naira, which ended up at N1,173.88 per US dollar.mThe market’s optimism that the naira outlook might remain positive in the face of mounting criticism over the Central Bank of Nigeria’s proposed FX float have been dampened by the currency rate’s zigzag movement.
Analysts told MarketForces Africa that “that permutation would damage the naira the more since Nigeria is a net importer of many things” and that it is impossible for the CBN to withdraw from the foreign exchange market and yet expect the naira to appreciate.
Meanwhile, accretion into the nation’s external reserves has been paused, with a second outflow recorded between May 24, and May 27, 2024. Gross external reserves saw successive inflows for a month, a pattern some analysts attributed to FX receipts from NNPCL oil sales.
At the time of filing this report, foreign reserves had fallen by $32.70 billion due to two successive outflows amidst the expectation that the apex bank would inject US dollars into the official window after a week’s long absence.
Data from the FMDQ Securities Exchange platform revealed that the Nigerian naira depreciated by 13.27% against the US dollar in the NAFEM window, closing at a rate of ₦1,329.65. The volume of currency traded on Wednesday increased to $336.54 million, up from $328.32 million recorded on Tuesday.
In the parallel market, the naira strengthened by 2.68%, ending at N1,455 per US dollar. Pressure returned to the global commodity market ahead of the OPEC meeting at the weekend. West Texas Instrument (WTI) crude futures and Brent crude prices slid to $79.57 and $83.91 per barrel, respectively.
