Naira Reverses, Depreciates Against Dollar, CBN Release New Exchange Rates
- The naira has depreciated in the official market to its lowest level in two months
- The currency had earlier appreciated to N1,337 per dollar in February, but has since weakened
- The naira also fell in the parallel market, widening the gap with the official rate to N15
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Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Naira has again depreciated in the Nigerian foreign exchange market following rising dollar demand triggered by the ongoing war in the Middle East.
Data from the Central Bank of Nigeria showed that the naira fell to N1,425 per dollar on Monday, March 9, from N1,398 per dollar last weekend, reflecting a depreciation of N27.
Source: Getty Images
The latest exchange rate is the lowest the naira has touched in the last 2 months.
In recent weeks, the Nigerian currency has been on an appreciation trend in the official market since February 17, reaching N1,337 per dollar early last week before it began a gradual depreciation to N1,395 last weekend.
Cumulatively, the local currency has lost N88 to depreciation in the last three weeks.
Similarly, the naira depreciated in the parallel market from N1,405 per dollar last Friday.
Abudullahi, a BDC trader, told Legit.ng that:
“We sold the dollar at N1,430/$1 and bought at N1,407/$1 on Tuesday, while the pound traded between N1,845 and N1,880, and the euro between N1,600 and N1,630.”
Consequently, the margin between the parallel and official markets widened to N15 per dollar from N7 per dollar last weekend.
Forex market activities
An investigation by Vanguard shows that the naira’s recent depreciation, which intensified last week, is largely due to growing demand for dollars from Foreign Portfolio Investors (FPIs) leaving the country amid heightened risk perceptions caused by the U.S./Israel–Iran conflict.
A source in the banking sector revealed that the CBN injected $500 million last week to stabilise the forex market and ease the pressure from FPI-driven dollar demand.
Similarly, analysts at Financial Derivatives Company said:
“The decline in the Naira comes amid intensified demand for the U.S. dollar driven by escalating Middle East tensions.”
The naira has dropped as demand for the US dollar surges due to rising tensions in the Middle East, analysts at Cowry Asset Management confirmed.
Source: Getty Images
CBN releases new exchange rates
- CFA: N2.45
- Yuan/Renminbi: N201.40
- Danish Krona: N215.75
- Euro: N1,612.14
- Yen: N8.80
- Riyal: N371.10
- South African Rand: N83.69
- Swiss Franc: N1,788.75
- Pounds Sterling: N1,863.06
- US Dollar: N1,393.26
- UAE Dirham: N379.23
Foreign reserves record first gain in 5 months
Legit.ng previously reported Nigeria's foreign exchange (forex) reserves have recorded the first increase in five months, significantly boosting the Central Bank of Nigeria's fight to help the naira recover its lost value.
In a statement published on its website, CBN reinstated its commitment to intervene in the foreign exchange markets to increase liquidity and ease demand pressure on the naira.
The increase was due to the steady improvement in crude oil production and upbeat global oil prices.
Source: Legit.ng
