Naira Falls Against Foreign Counterparts Across Key Forex Segments

Foreign exchange scarcity amid economic uncertainties continues to dictate the Nigerian Naira value against its global counterparts.

The local currency declined against the United States dollar on the parallel market, popularly called the black market, by N2 from N470 it traded last week to N472 on Monday.

Against the British Pound, the Naira remained unchanged at N575, its lowest in three years. The story wasn’t different with the Euro single currency as Naira succumbed to pressure and plunged by N5 from the N520 it exchanged on Friday to N525.

This decline did not stop on the black market as Investors and Exporters Foreign Exchange Window witness similar depreciation.

The Naira declined to N388.50 against the United States dollar on the I&E FX window, down from N388.40 it opened the day.

Also, activities on the window remained low as investors traded $38.72 million in turnover volume.

While the official rate stipulated by the Central Bank of Nigeria remained at N381 to a US dollar, persistent dollar scarcity continues to weigh on the Naira outlook.

Nigeria’s foreign reserves, used to back the Naira, has been on a downward trend since peaking at $45 billion in June 2019 and currently stood at $36 billion, according to the data from the central bank.

With crude oil trading at $42 per barrel and foreign capital inflow fading away due to global economic uncertainties, businesses and investors are worried the apex bank would soon lose its ability to intervene at the local forex market or support the Naira.

Also, the recent activity of the central bank at unifying the nation’s forex rate after years of saying no alluded to its fading prowess to defend the Naira.

Meanwhile, the central bank-led monetary policy committee on Monday maintained a 12.5 percent benchmark rate.

Mr. Godwin Emefiele, the Governor, CBN, said eight of the 10 members committee voted to maintain the current rates while the remaining two voted for further reduction in rates.

The governor said the members left the rate unchanged to assess the impacts of the recent 100-basis-points rate cut from 13.5 percent to 12.5 percent on the economy as a whole.