Naira Further Depreciates Against The Dollar

The dollar closed at N380 after trading on Friday in some parts of Lagos black market. This represents N3 loss compare to N375 traded in the morning of the same day.

The depreciation in value of the naira was attributed to increased demand for dollar by end-users occasioned by speculation that the Chinese have resumed business and importers of finished goods are buying dollars to meet their needs.

A black market operators said: “Since we heard that the Chinese have resumed, dollar started to go up.”

However, in some area like Apapa, Lagos, the dollar closed stable at N377.

The Central Bank of Nigeria, CBN, in its foreign exchange management policy, had restricted access to forex on some 43 food and non-food items that can be produced in the country.

At the Investors and Exporters, I&E, forex window, the dollar was quoted at N372, losing N1.65kobo from N370.35/$ traded the previous day, data from FMDQ show.

On Thursday with dollar appreciated by 67 kobo to an average rate of N376 from N376.67k per dollar traded in the morning of the same day at the black market.

According to a Bloomberg terminal reports, the CBN, on Friday, moved the FX sales rate to Foreign Portfolio Investors (FPIs) to N380.2/$, from N366.7/$, in a move that suggests a technical devaluation of the naira.

The Naira, recently, suffered its biggest daily depreciation of N8.5 against the US dollar in the parallel market since 2017, as the exchange rate rose sharply to N367 per dollar from N358.5.

At the Investors & Exporters (I&E) window, the exchange rate jumped to N368.33 per dollar from N366.75, losing N1.58, the biggest daily depreciation since 2017, when the window was introduced.

Market operators said the development has been triggered by the sudden jump in dollar demand as many traders and anticipate foreign exchange scarcity expected to arise from the crash in the oil price which will mean a huge drop in foreign exchange inflow to the economy amidst persistent fall in the nation’s external reserves. These, they believe, would lead to eventual devaluation of the naira.