The Nigerian local currency, the Naira, has registered its worst daily depreciation in history as the exchange rate worsened by more than 51% on Monday. The forex market apparently ignored the news that the Central Bank of Nigeria (CBN) released an additional sum of $500 million to clear FX backlog for verified trades.
Both forex markets witnessed increased demand for foreign currency amidst the US dollar shortage in the economy. For four months, the CBN has stopped FX injections into the official window – allowing demand and supply to determine the rate.
With the latest negative swing, Nigeria’s local currency has proven predictions that the official exchange rate would cross N1000 in 2024 right, analysts stated.
Agusto Ratings expects the exchange rate to hit N1,100 while CardinalStone Partners Limited predicted an official rate of N1000. Conservatively, S&P Ratings forecasted that the local currency would depreciate further amidst an expectation that there could be another devaluation.
Data from the FMDQ platform showed that the Nigerian Naira depreciated by 51.21% against the US dollar in the Nigeria autonomous foreign exchange market (NAFEM) Window, closing at a rate of ₦1348.63.
Similarly, In the parallel market, the Naira depreciated further by 2.43% to close at N1,440 to the US dollar. Strong negative exchange rate movement in the official market has reduced the gap between official and parallel market rates.
In the global commodity market, the price of crude oil experienced a decline, with Brent crude dropping by 1.47% to trade at $81.73 per barrel on Monday. Also, the West Texas Intermediate (WTI) crude oil decreased by 1.58% to trade at $76.78 per barrel.
