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Report: Naira Drops To Fresh Lows As Liquidity Dwindles - NEW TELEGRAPH
Record-high fixedincome yields and Central Bank of Nigeria (CBN) intervention have failed to stem the naira’s slide, with the local currency hitting a fresh record low this week, according to a Bloomberg report.
The report noted that the naira weakened 0.6 per cent to N1,681 per dollar on Wednesday, according to FMDQ, which calculates the exchange rate.
The currency has lost 72 per cent of its value since reforms in June 2023 that allowed it to trade freely. It, however, appreciated to N1639.50 per dollar on Thursday.
The report quoted Samir Gadio, head of Africa strategy at Standard Chartered Plc as saying that: “Portfolio inflows seem to have faded over the past two weeks,” while central bank intervention to boost dollar supply remained “moderate.” Gadio noted that “dollar demand tends to pick up periodically.”
According to the report, the CBN sold N1.4 trillion ($835 million) of one-year OMO bills at 24.28 per cent on Monday after offering the security at a record 24.32 per cent earlier this month, in a bid to attract dollar inflows.
That failed to boost liquidity as spot turnover in the currency market dropped 10 per cent to $196.8 million on Wednesday from the previous day, according to FMDQ. That’s well below the one month average of $226.3 million.
With the inflation rate at 32.7 per cent in September, real interest rates remain deeply negative, adding to investor concerns about committing money to softcurrency assets amid a sluggish economy.
CBN Governor, Olayemi Cardoso, said in September he’s aiming for positive interest rates, as he unexpectedly lifted the benchmark rate by half a percentage point to 27.25 per cent.
