In the foreign exchange (forex) market, the value of the Nigerian naira declined to N1.581.65 versus the US dollar, representing yet another blow to the currency. As qualified FX demand surpassed the amount of US dollars available for sale on the Nigerian autonomous foreign exchange market (NAFEM), the spot rate deteriorated.
The naira’s value has been weakened by the currency market’s state of disequilibrium. Following the Central Bank of Nigeria’s (CBN) withdrawal of US dollar sales to banks and authorized dealers, the situation in the foreign exchange market deteriorated.
In the first half of 2024, the naira lost 40% of its value due to the difficulties caused by a lack of US dollars in the face of growing import demand. To increase foreign currency availability, the top bank did, however, start selling foreign exchange again at the official market. But the effect was less effective as rising demand for the US dollar clouded the CBN efforts.
In the official NAFEM market, the naira depreciated by 0.32% to close at ₦1,581.65 per US dollar on Monday. In the parallel market, the naira closed at ₦1,565 per greenback because of an uptrend in invisible forex transactions by locals.
Data from the CBN showed that Nigeria’s external reserves climbed further to $35.772 billion, the level they were at on March 23, 2023. Gross external reserves hit a 16-month high after the country recorded additional FX inflows on Tuesday.
In the global commodity market, oil prices increased on Wednesday, rebounding from three days of losses due to a sharp decline in US oil stockpiles. Brent crude rose by 1.22% to $84.75 per barrel. Similarly, West Texas Intermediate (WTI) crude extended gains by 1.82% to $82.23 per barrel.
