Naira Depreciates by 0.17%
Naira US Dollar
Naira Falls by 0.17% Due to Increased Demand for Foreign Exchange
The Nigerian Naira has depreciated by 0.17% against the US dollar due to increased demand for foreign exchange. On Wednesday, the Naira exchanged at N463.02 to the dollar at the investors’ and exporters’ window, a decline from the N462.25 rate it exchanged for on Tuesday. However, at the open market, the local currency remained steady amidst expectations of devaluation.
The spot exchange rate of N467 was initially used for trading within the day, but it eventually settled at N463.02. During the day’s trading, the Naira sold for as low as N460 to the dollar, and there was a total turnover of $178.68 million at the official investors’ and exporters’ window due to the spike in forex demand.
At the parallel market, forex players had to pay ₦746 to obtain the US dollar, while the external reserve further decreased by $0.01 billion to close at $35.26 billion. Despite the $6 billion inflow from non-oil exports in 2022, the accretion into foreign reserves remained low due to lower inflows from hydrocarbon sales, even when oil prices stayed on a bullish course. Brent and Bonny closed at $74.5 and $77.4 per barrel, respectively, in the global market.
The Nigerian central bank’s intervention in the market was supported by the forex inflow, but it was insufficient to reverse the Naira’s fortune. The Naira’s fall against the dollar could lead to inflation and negatively impact the economy. It could also increase the cost of importing goods and services, which could lead to higher prices for consumers.
The increase in demand for foreign exchange has led to a decline in the Naira’s value against the US dollar. Despite efforts by the Nigerian central bank to intervene in the market, the Naira’s value remains vulnerable due to the low inflow of forex from oil sales. It is essential for the government to increase its efforts to diversify the economy and increase non-oil exports to reduce the country’s dependence on oil sales and stabilize the Naira’s value.
