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Naira Falls on Weak Inflation Report, CBN Policy Direction

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naira

Naira Declines on Weaker than Expected Inflation Report

The Naira declined on Wednesday against the United States dollar after a report by the National Bureau of Statistics shows the inflation rate surged to 12.40 percent in Africa’s most populous nation, Nigeria.

Nigerian Naira slid from N452 it exchanged to a US dollar earlier on Wednesday to N453 on the black market after the report was made public later in the day.

The local currency appreciated against the British pound by N3 to N550, better than the N553 it traded earlier on Wednesday.

Against the Euro single currency, the Nigerian Naira remained flat at N490, the same rate it was exchanged earlier on Wednesday.

On the nation’s Investors and Exporters’ Forex Window, the Naira was exchanged at N386 to a US dollar on Wednesday, the same rate it was traded on Tuesday but opened at N368.63 against the greenback on Thursday. A 0.6 percent decline from Wednesday close.

However, the local currency slid as low as N400 against the US dollar on the I&E FX window before pulling back to close at N386 on Wednesday. That was largely due to the inflation report released during the day.

A turnover of $16.06 million was registered on Wednesday, up from $15.31 million recorded on Tuesday, according to the FMDQ Group data released on Thursday morning.

The local currency declined after data shows the nation’s consumer prices are not slowing down any time soon and further highlighted the possibility of a decline in consumer spending and economic activities in the second half of the year.

This, coupled with the report that the Central Bank of Nigeria is planning to converge the nation’s exchange rate to one single rate across forex segments, created panic and likely triggers hoarding across forex markets.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Naira

Naira Closed at N411.25 to US Dollar at NAFEX Window

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira declined further against the U.S Dollar on Tuesday ahead of the Ramadan holiday to trade at N411.25 to a single U.S Dollar at the Nigerian Autonomous Foreign Exchange (NAFEX) window.

The local currency plunged as low as N420.23 per dollar during the trading hours of Tuesday despite opening the day at N410.33/US$ before settling at N411.25 to a US dollar.

Investors on the window exchanged $98.33 million on Tuesday.

At the parallel section of the foreign exchange, Naira traded at N483 to a United States Dollar; N673 to a British Pound and N580 to a Euro.

Foreign exchange rates remained largely unchanged at the bureau de change section, with the Naira trading at N482 to a U.S Dollar; N674 to a British Pound and N584 to a Euro.

Several factors continue to weigh on the Nigerian Naira, especially with the foreign reserves hovering around record low and crude oil output not at an optimal level.

Other factors like rising inflation rate and drop in economic activity due to COVID-19 effect on the economy and lack of enough fiscal buffer to cushion the economy.

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Naira

Daily Naira Exchange Rates; Thursday, May 6, 2021

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Naira Exchange Rates - Investors King

Naira depreciated further at the parallel market on Thursday as the local currency traded at N485 to a United States Dollar. The Nigerian Naira exchanged at N676 to a British Pound and N585 to a Euro as shown below.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
06/05/2021 480/485 665/676 575/585 62/69 395/405 292/320

Bureau De Change Naira Rates

Date

USD

GBP

EURO

NGN

BUY/SELL

BUY/SELL

BUY/SELL

06/05/2021

475/482

663/676

575/587

06/05/2021

475/482

663/676

575/587

Central Bank of Nigeria’s Official Naira Rates

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Forex

CBN Extends N5/$ Incentive Period to Boost Dollar Inflow

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has extended the N5 per US Dollar incentive on forex remittance indefinitely to boost liquidity and further deepen economic recovery.

The initiative was scheduled to end on May 8. It was introduced to encourage recipients of dollars to use formal banking channels and help the central bank capture such inflows to boost the stability of the local currency, which has been under pressure after oil prices plunged last year.

“We hereby announce the continuation of the scheme until further notice,” the regulator said in a statement on its website on Thursday.

The naira has been devalued three times since last year after a sharp drop in oil earnings, which accounts for 90% of foreign-exchange inflows, and remittances from workers abroad led to a dollar crunch in the West African nation, which produces the most crude in Africa. The local unit traded for 410.31 on the investors and exporters window, also called Nafex, as of 8:51 a.m. in Lagos.

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