Due to ongoing issues with foreign exchange liquidity, the naira had negative trading against the US dollar in both the official and black markets.
The naira exceeded N1,621 per US dollar during the official window amid what analysts described as the central bank’s “late” intervention in the foreign exchange market—selling the US dollar to banks and bureau de change once the local currency had depreciated sufficiently. All of the naira bulls who anticipated lower rates in the forex market have been somewhat disappointed by the deteriorating exchange rate.
Demand at the Nigerian independent foreign exchange window on Tuesday is increasing more quickly than the quantity of US dollars available for transactions by the FX bidders. The outlook for the naira looks bleak as FX sales to authorised dealers appear to be insufficient to upturn the local currency fortune.
The post-devaluation experience in the market has been damaging for corporate organizations, and the end to this mess appears not to be in sight. The monetary authority’s blue-sky thinking on exchange rate devaluation has worsened economic conditions in the last year.
The latest earnings releases from some listed companies show that the negative air has persisted, resulting in price hikes in basic goods and prices and helping inflation rise.
In the official NAFEM market, the naira ended the session at ₦1,621.12 per US dollar, according to data from the FMDQ platform, marking a 0.60% depreciation from the previous close. The same experience was felt in the informal currency market, even with the surge in gross external reserves. The naira averaged ₦1,585 per US dollar, reflecting a 0.57% depreciation from the prior session in the parallel market, according to a channel check.
“The fact that the total volume of US dollars available in the official market remains limited, insufficient to meet demand logged by authorised traders, speaks to the sustained decline in the value of the local currency’, analysts said in a chat with MarketForces Africa.
Today, gross external reserves climbed to $36.708 billion, data from the Central Bank showed, hitting an 18-month high on Monday.
The accretion into external reserves had raised hope that the apex bank intervention would be strong. On the contrary, FX intervention has been mild and insufficient to boost the local currency value.
In the global commodity market, Brent crude prices decreased by 1.30% to $78.75 per barrel. Similarly, West Texas Intermediate (WTI) crude fell 1.27% to $74.84 per barrel on Tuesday.
