Skip to main content

NAIRA WEAKENS TO LOWEST IN THREE YEARS

NAIRA WEAKENS TO LOWEST IN THREE YEARS
The Naira yesterday weakened to the lowest in over three years in the parallel market due to increased demand for dollars amid foreign-currency shortages.

The local currency depreciated to N495 to a dollar yesterday, lowest since February 23, 2017, widening the gap with the official rate of N379.5 to over 30 per cent. The currency traded in the interbank market at 389.74 as of 4:54p.m. in Lagos.

Agency reports quoted traders as alleging a groundswell of diversion of dollars, a development which heightened scarcity of the green back in the parallel market this week.

There is a diversion of inflows away from official channels to the parallel market due to the gap in rates, Murega Mungai, trading desk manager for Aza Finance said in a note Thursday.

The market spread has created arbitrage opportunities for recipients of remittances such as exporters and private individuals.

Pent up demand in the foreign exchange market is not unprecedented given increase purchase of items in preparation for seasonal festivities, Nkemdilim Nwadialor, analyst at Tellimer markets said. “This has been compounded by the fact that all through the year, we have had dollar shortage,” she said.

A directive from the Central Bank of Nigeria (CBN) that exporters must register with it through an online portal has slowed the export of cocoa and other non-oil exports. That will likely worsen foreign-exchange shortage in Africa’s biggest economy and impede the government’s efforts to diversify the economy away from its dependence on oil.

Nigeria’s foreign exchange reserves, currently at $35.4 billion has dropped about 3 % since May when it climbed to 36.6 billion, after picking up from April lows when it was hit by fall in crude prices and Coronavirus pandemic.

The gap in the exchanges rates in the parallel and official markets is because of decline in revenue from oil, Nigeria’s main export, Minister of Finance, Budget and National Planning, Zainab Ahmed said.

The government is concerned about the spread and is taking steps to address the issue of scarcity, but “the progress is not as much as we hoped,” she said in a Bloomberg TV interview yesterday.

“We hope to get to an even level very soon so the impact of the exchange rate will become moderated,” Ahmed said.


Comments

Post a Comment

Popular posts from this blog

NSE vows to enhance retail investment opportunities

NSE vows to enhance retail investment opportunities   The Nigerian Stock Exchange has expressed its commitment to redefining and improving investors’ overall experience in the Nigerian capital market, and ensuring that it remains modern, convenient and secure. This was highlighted at the inaugural edition of the Retail Investors’ Webinar hosted by the Exchange in collaboration with the Nigerian International Securities Limited on Monday. The event, with the theme ‘Capital market investing in a digital age’, was supported by the Chartered Institute of Stockbrokers and the Association of Securities Dealing Houses of Nigeria. Speaking during the webinar, the Chief Executive Officer, NSE, Mr Oscar Onyema, said, “Investor participation is central to the growth and sustainable development of any economy. “The Exchange is, therefore, committed to facilitating conversations that will expound on the retail investment opportunities available in the capital market and the chann...
Post a Comment
Read more

Petrol scarcity looms as tanker drivers halt operations

Petrol scarcity looms as tanker drivers halt operations   Petrol scarcity may surface across the country as the Nigerian Association of Road Transport Owners on Monday ordered tanker drivers nationwide to halt operations beginning from Tuesday (today). NARTO gave the directive in Abuja in protest against the Federal Government’s ban on petroleum trucks above 45,000 litres from plying Nigerian roads. NARTO is the umbrella organisation of all commercial vehicles owners in Nigeria engaged in the haulage of petroleum products, general cargoes, and movement of goods and passengers within the country and the West-African sub-region. Speaking at a press briefing in Abuja, NARTO’s National President, Yusuf Othman, said members of the association would have to park their trucks on Tuesday and Wednesday as warning to government against the abrupt ban. He said, “NARTO received with grave shock the recent government decision to place immediate ban on all petroleum trucks above 45,...
Post a Comment
Read more