Nigeria’s naira is expected to have little price swings in the coming weeks, as the Federal Government’s lockdown of Lagos and other parts of the country continues to aggravates dollar shortages.
The naira traded at N387.65 per dollar in the over-the-counter (OTC) market on Thursday, due to poor market liquidity. It had softened to an intra-day low of N388 on the official market in the previous session but later rebounded.
Meanwhile, U.S. crude oil was below the $20 level, closing at $19.87 a barrel on Thursday, while Brent crude oil closed at $27.82 a barrel, falling below Nigeria’s adjusted benchmark for crude oil pegged at $30 thereby reducing dollar earnings for Nigeria. Crude oil makes about 90% of Nigeria’s export earnings.
On Monday, Nigerian authorities extended the lockdown on Lagos, Ogun, and Abuja by fourteen more days. The lockdown is aimed at curbing the spread of the Coronavirus in Nigeria. Although well-intended, the lockdown is seriously affecting the country’s economy. In the meantime, the Central Bank now rendering skeletal services even as currency traders work from home. Yet, dollar shortages have worsened.
Recall that in mid-March 2020, Nigeria’s apex bank postponed forex sales to retail currency traders and Bureau de Change operators after the Federal Government banned entry to nationals from 13 countries with over 1000 Covid-19 cases. Nigerians were also advised to cancel or reschedule their any planned travels to those countries.
The American dollar index surged on Thursday, closing at $100.130 as investors rushed to safety, following a series of negative data.