The Nigerian Naira hit its lowest value of the year on the first trading day of April, as the demand for dollars rose while the external reserves declined.
Naira depreciated by 0.46 percent on Monday, with the dollar quoted at N463.50 at the Investors and Exporters forex window, which is Nigeria’s official foreign exchange market, as opposed to N461.38 at the close of trading on Friday.
BusinessDay reported that currency dealers kept their bids between N460.00 and N466.00 per dollar at the FX market auction on Monday.
According to data from FMDQ, “The foreign exchange market turnover, which reflects activity levels in the I&E window, was $175.40 million on Monday.”
As the Central Bank of Nigeria continued to intervene across various FX windows, the country’s external reserves decreased by 0.56 percent to $35.53 billion.
Analysts at Coronation Research, said it is not the time for a change in CBN policy, and they anticipate only minor FX rate changes in the coming weeks and months.
In his words, “This does not seem to be the time for a change in CBN policy, in our view. The CBN is likely to continue with its policy of gradual loosening of the I&E Window rate while managing FX reserves at close to their historic highs. We expect only small FX rate adjustments over the coming weeks and months.”
Last week, the exchange rate at the Investors and Exporters Window decreased by 0.01 percent, closing at N461.38/$1.
On the parallel market, also known as the black market, the naira closed at ₦746 per dollar on Monday, down marginally from ₦745/$ last week.
However, a black market operator claimed that there is no demand for dollars in the market, so it cannot be called depreciation.
Speaking to BusinessDay on Tuesday, the operator said, “You can’t say this is depreciation because there is no demand for dollars in the market
According to a report by Coronation Research, in the previous week the price of Brent increased by 6.37 percent to $79.77/bbl for the second consecutive week.
The report stated that Brent was down 7.15 percent year-to-date and is trading at an average of $82.16/bbl, which is 17.08 percent lower than the average of $99.09/bbl in 2022.
