Tuesday’s Investors and Exporters foreign exchange market saw a 0.11% decrease in the value of the Nigerian naira after the country announced that export receipts declined by almost 20% in the third quarter of the year.
The market was heated up by the demand for foreign currency for imports, which caused the exchange rate at the Investors FX window to touch N445.80 from N445.33 reported yesterday.
Data from the National Bureau of Statistics show that export revenue decreased in the third quarter, which coincides with a decline in foreign currency inflows into the economy.
The Nigerian economy, which was struggling to thrive and was heavily dependent on imports to ensure the existence of its people, had a negative trade balance.
According to analysts, the Central Bank of Nigeria (CBN) needs a substantial cushion of gross foreign reserves to maintain the naira’s strength through market intervention.
Unfortunately, attempts to introduce foreign cash into the local economy have failed.
Due in part to CBN capital restriction measures and its multi-tiered exchange rate system, which are acknowledged to be confusing investors about the actual value of the naira, foreign investors continue to stay away from Nigeria.
Nigeria’s statistics agency stated in the trade report that overall exports decreased by 19.89% as compared to the second quarter of 2022.
When compared to the third quarter of 2021, when it ended at 5.136 trillion, it climbed by 15.52%.
While dollar inflows from exports decreased over that time, Nigeria’s import bills increased, a situation that helps to explain some of the ongoing pressures on the local currency. Oil Prices Fall as Saudi Arabia Increases Production
In contrast, overall imports increased by 4.22% in the third quarter of 2022 to reach $5,664.30 billion, up from the amount of $5,435.01 billion in Q2 of that year.
When compared to the figure recorded in the equivalent quarter of 2021, when Nigeria reported 5,335.86 billion, this corresponds to a 6.16% rise.
The country’s external reserve, which last printed at $37 billion and covered around 10 months’ worth of imports while the world price of oil remained low, looks to have been harmed by the negative trade situation.
Prior to the issuance of the new Nigerian naira notes, the exchange rate in the black market traded smoothly. Channel checks revealed that the FX spot rate was N735 throughout the market of Bureau de Change operators.
The price of Brent crude decreased 0.50% on Tuesday to $82.26 per barrel, while the price of the west Texas instrument grade dropped to $76.58 per barrel.
In light of expectations that the local currency may undergo a forced devaluation, Nigeria Autonomous Foreign Exchange Fixing (NAFEX) turnover jumped by 33.7% to $159.0 million on Friday close, according to FMDQ statistics.
