As markets discounted the news of $10 billion in inflows into the economy in the coming weeks, the value of the Nigerian naira dramatically declined on Tuesday, dropping 6.86%. The limited input of US dollars into the local currency, according to analysts, is a significant problem.
The market’s forex demand and supply imbalance worsened as a result of the foreign currency shortage, which put the naira in an unfavorable position as a result of the continued demand for imports and other payments denominated in foreign currencies.
Nigerians were informed on Monday by their finance minister, Wale Edun, that the government anticipates a $10 billion influx to the system in the upcoming week. As a result, the local currency gained value again even while the exchange rate on the black market remained static.
The naira declined in the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, closing at N847.77 per US dollar, despite the anticipated inflows. Despite the decision to lift FX bank on 43 products, the open market saw a similar trend.
A new low of N1,265 was reached for the Naira versus the US dollar on Tuesday in the parallel market as demand pressure continued to bite deeper on the back of little to no dollar supply.
The external reserves were stable at $33.25 billion, or nearly seven months’ worth of imports. Due to the Middle East conflict, the oil market saw a change in trend. To $89.04 per barrel, Brent oil is down 0.88% today. West Texas Instrument is similar. West Texas Instrument (WTI) crude fell by 1.00% to $84.64 per barrel.
