Further losses prevented the Nigerian naira from strengthening as currency rates on all forex exchanges kept moving in the direction of the worst-ever red line. Demand for foreign money exceeded supply in both official and black markets, even though several attempts were made to prevent the local currency from collapsing.
According to statistics from the FMDQ platform, the Naira fell by 3.94% to settle at N1,598.54 per US dollar on Monday at the Nigerian independent foreign currency market.
Similarly, the Naira depreciated against the US dollar on the parallel market, closing at N1,700 per US dollar at the same time. While the Euro traded close, the British pound, or GBP, crossed N2000.
A warning sign that FX reform may ultimately backfire has been given by the declining exchange rate. A few analysts have already predicted that the US dollar could be at N2000 eventually if the supply side remains tight.
Naira is under pressure due to Nigerians’ over-dependence on imported goods. In addition, the recent past leadership of the Central Bank which is currently under investigation managed the monetary authority roughly. The current pressure facing the nation is the result of failed monetary and fiscal policies.
“Things will probably get worse, research analysts at LSintelligence Associates said in a discussion with MarketForces Africa, saying that usable external reserves are far below what we have today. At the close of business, external reserves printed at $33.2 billion – signalling there have been inflows lately.
FX inflows have been limited as foreign investors stay away from the financial markets. In recent times, Nigeria seem to be losing the attraction as the big bride to investors; Cowry Asset said in a review. Analysts explained that limited access to foreign exchange and the existence of multiple exchange rate systems still create uncertainties for investors on profit and dividend repatriation.
There are also concerns around insecurity which remains one of many threats to foreign investors and in turn discouraging investment inflows. The MSCI Index plans to remove Nigerian Indexes from the frontier market to stand alone on February 29, citing an inability to get dollars out from the country.
Global Commodity Market In the global commodity market WTI crude futures advanced by 0.23% to $79.38 per barrel on Monday. However, the Brent Crude decreased by 0.06% to close at $83.42 per barrel.
