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Naira Plunges To N1,520.40/$1 On Official Market - NEW TELEGRAPH

MAY 15, 2024

The naira extended its weakness on the official market on Tuesday, as it closed at N1,520.40/$1 compared to N1,478.11 per dollar the previous day, data from FMDQ shows.

Similarly, the local currency fell to N1,520 per dollar on the parallel market on Tuesday, from N1,470 per dollar on Monday, currency traders said. After rebounding by over 40% in the span of six weeks to this year’s high of N1,090/$ at the parallel market on April 18th, the naira has maintained a downward trend on the forex markets in recent weeks, a development, analysts attribute to increased dollar demand amid low domestic greenback liquidity.

Analysts also believe that the naira’s renewed weakness is occasioned by intensified speculation, hoarding, as well as late disbursement of FX to Bureaux De Change ( BDC) operators by the Central Bank of Nigeria (CBN). According to BDC operators, it usually takes three to four weeks after payment before the apex bank disburses dollars to them.

They said the situation has led to some BDCs withdrawing from the regulator’s dollar sales programme. Last Friday, citing what it described as the recent “loss of momentum “ in foreign inflows as well as inflows from local sources, Africa’s biggest lender, Standard Bank, said in a report that it expects a N1219.32 per dollar exchange rate by December 24.

The South Africa-based lender said its forecast was informed by its projections on inflation and interest rate for December as well as its expectation that the Central Bank of Nigeria (CBN) will continue with its intermittent fx supply to commercial banks and Bureau De Change (BDC) operators. Standard Bank also said naira volatility will likely persist because fx demand pressures will still resurface from time to time especially on or around December.

It stated: “We foresee the USD/NGN pair settling at 1219.32 by Dec 24. Importantly, we also factor in our inflation and interest rate projections into Dec. Further, we assume the CBN as maintaining intermittent FX supply to commercial banks and Bureau De Change (BDC) operators. Currency movements will likely be volatile because FX demand pressures will likely resurface intermittently, particularly in the summer.”

The lender pointed out that inflows into Nigeria snapped two consecutive months of increase, declining by 48.1 per cent m/m, to $1.95 billion in April, after reaching a 50-month high of $3.75 billion in March.”


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