The naira tumbled against the United States dollar to 428 on Wednesday, down from 424 on Tuesday, as persistent dollar shortage continues to weigh on the economy.
The major decline in the local currency against the greenback came a day after the Central Bank of Nigeria’s Monetary Policy Committee retained the benchmark lending rate at 14 per cent.
At the interbank official market, the local currency dropped to 310.08 on Wednesday, down from 307.25 on Tuesday, according to data on the FMDQ OTC platform.
Some foreign exchange analysts believe the decline in the value of the naira has nothing to do with the MPC decision to leave the lending rate unchanged.
They said the decline in the value of the naira against the US currency would have been more significant if the MPC had announced a cut in the MPR on Tuesday.
“The developments in the official and parallel markets are a reflection of the usual pressure on the naira. It has nothing to do with the MPC’s decision to leave the interest rate unchanged. We would have seen a major decline in the naira if the committee had announced a rate cut,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
“We can see that the dollar-naira exchange rate has been stable over time now. It is partly because the CBN has been able to meet its futures obligations. It has brought some relative calmness to the market. Again, the demand for forex by players in the oil and gas sector has been taken from the interbank market. This has also brought calmness to that market,” he added.
Meanwhile, the CBN said on Wednesday that interest rate cut alone would not help to pull the economy out of recession amid rising inflation.
The Director, Monetary Policy, CBN, Mr. Moses Tule, said policymakers would need to act together on fiscal, monetary and trade policies to jump-start economic growth.
He told Channels TV, “It’s not sufficient for the monetary policy committee to just meet and say we are reducing interest rates to address a stagflation.
“In a situation where we have negative interest rates, what we have to do is to overcome negative interest rates.”
He said Nigeria’s policy rate had been stuck at six per cent in the past but it didn’t spur credit growth, because the banking system did not respond to the move.
Tule explained that inflation was rising not due to excess money supply, but because of recent reforms, which included a hike in electricity tariffs, fuel price and a currency float that led to a 30 per cent drop in the value of the naira in one day.
“If we were merely in a recession, then we could say we would spend our way out of the recession. For an economy like Nigeria, where there are key structural deficiencies, there’s an urgent need to harmonise the policy mix,” Reuters quoted him as saying.
Naira Gained Slightly at I&E Forex Window to N412.81/$US
Despite the Nigerian Naira trading at a record-low across the nation’s unregulated black market, the embattled currency opened slightly higher at N412.81 to a United States Dollar on Monday at the Investors and Exporters Forex Window, representing an increase of 0.08 percent when compared to the N412.88 it closed on Friday.
The improvement in Naira value was after the Central Bank of Nigeria (CBN) directed all depoisit money banks operating in the country to freeze bank accounts linked to Oniwinde Olusegun Adedotun, the founder of www.abokfx.com, a forex rate publishing platform.
Godwin Emefiele, the Governor, CBN had blamed black market and bureau de change operators for the constant plunge in Naira value against its global counterparts and insisted that forex rates remained the apex bank stipulated rates and not the unregulated rates imposed by speculators and hoarders and published to the public by Abokifx and other business platforms.
“There was a particular time I asked our colleagues to call the so-called owner of abokiFX, that we want to understand his model and how he came about advertising those rate, we find him as someone, a Nigerian who lives in England and conducts this nefarious activity on our economy.
“It is economic sabotage and we will pursue him, wherever he is, we will report him to international security agencies, we will track him, Mr Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy.” Emefiele said.
The governor further stated that the website was set up primarily manipulate and speculate forex rates. He said “they get naira loans, use to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit, this is completely illegal, unacceptable and we will pursue them.”
On Friday, the last time Abokifx published unregulated forex rates, Naira was qouted at N570 to a United States Dollar while the British Pound and the Euro were quoted at N770 and N655, respectively.
U.S Dollar Jumps to Three Weeks High on Better Than Expected Retail Sales
The United States Dollar rose to a three-week high after data from the Commerce Department showed that the U.S retail sales rebounded in the month of August despite falling consumer confidence.
The US Dollar Index rose to 93.40 on Monday to extend Friday breakout above the 93.00 key resistance level.
U.S retail sales jumped to its highest in five months in the month of August to beat 0.8 percent decline predicted by experts. Retail sales grew by 0.7 percent in August to increase the odds of the US Federal Reserve announcing tapering during next week’s Federal Open Market Committee (FOMC) meeting.
“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the Delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”
Against the Japanese Yen, the U.S dollar strengthened to 109.48 from 109.91 attained on Friday on broad-based selloff during London trading session, while heavy selloff plunged British pound against the U.S dollar 1.36610 before reboundling slightly to 1.36946.
The Euro dropped from 1.17883 recorded on Friday to 1.16995 on Monday during London trading session.
Naira Exchange Rates Today, Friday, September 17, 2021
Naira continued its downward trend against other currencies on Friday as it plunged to N570 against the United States Dollar at the black market. The local currency traded at N770 and N655 to British Pound and Euro, respectively.
Persistent forex scarcity amid a series of in effective policies have made access to forex impossible for most of businesses that operates in largely import dependent African biggest economy.
Nigeria’s forex reserves, the means in which the nation, service its dollar consuming 200 million population has been on a decline in recent weeks despite crude oil trading at over a year high of $73 a barrel. Some of the factors that have crippled the ability of central bank to cushion the economy with enough forex is low crude oil production, partly due to production cap, weak local manufacturing sector that has made the nation a huge import dependent economy, the ongoing crisis between herders and farmers, rising costs even with falling inflation, etc.
At the bureau de change section, Naira exchanged at N565, N775 and N655 to a United States Dollar, British Pound and Euro common currency.
The Central Bank of Nigeria (CBN) had stopped the sale of forex to the bureau de change operators to plug forex leakages and curb activities of criminal elements, the decision has worsen forex availability. See other forex rates below.
Naira Black Market Exchange Rates
Morning * Midday** Evening *** Final Rates
Bureau De Change Naira Rates
Central Bank of Nigeria’s Official Naira Rates
|9/16/2021||SOUTH AFRICAN RAND||28.3101||28.3446||28.3792|
N.B: These tables are updated three times a day.
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