Naira Falls Against the United States Dollar on Parallel Market
The Nigerian Naira declined further against the United States dollar on Friday on the parallel market, known as the black market.
The local currency lost N3 to trade at N460 to a US dollar. This was lower than the N455 it was exchanged on Wednesday and N457 it traded on Thursday.
Accordingly, the Naira slid against the British Pound by N3 from N557 it traded on Thursday to N560 on Friday.
This decline continues against the European single currency as the local currency lost N4 from the N498 it was exchanged on Thursday to N502 on Friday.
On the Investors and Exporters Forex Window, the Naira improved slightly by 0.24 percent from N387.27 it traded on Thursday to N386.33 against the US dollar.
Activity level also improved by more than 100 percent from $14.68 million traded on Thursday to $35.92 million on Friday.
The local currency remains under pressure with weak revenue generation and slowing economic activities.
Naira Remains Pressure at N465/US$ Despite BDCs Expecting $50.9m from CBN
Naira Remains at N465/US$ Despite BDCs Expecting $50.9m Injection from CBN
The Nigerian Naira remained under pressure despite the Central Bank of Nigeria’s foreign exchange sales to the bureau de change operators (BDCs).
Since the apex bank resumed forex sales about two weeks ago, the local currency had only improved slightly against global counterparts as investors and businesses doubt the central bank’s ability to sustain forex intervention given the weak foreign reserves and low oil prices.
Two weeks ago, the apex bank injected $51.8 million into the foreign exchange market to ease scarcity and support Naira’s value, however, despite the amount injected, the local currency only moderated slightly from N480 to a US dollar to N443 before depreciating back to N465 following the increase in electricity tariff and complete subsidy removal.
In what appeared like investors have started pricing in a further decline in consumer spending, especially with inflation hovering above 13 percent and expected to rise further with an increase in prices.
Also, Nigeria’s unemployment rate remained high at 27.1 percent, meaning apart from weak revenue generation and definitely low tax revenue, businesses will not be creating enough jobs to cushion the impact of COVID-19 on the economy.
A situation expected to further weigh on Naira outlook against global counterparts, even with central bank forex sales.
The Naira exchanged at N465 to a US dollar on Tuesday despite Bureau de change operators expecting $50.9 million forex allocation from the central bank today. This means, the market no longer expect a meaningful impact from the apex bank intermittent intervention because of the disparity in the amount being injected and forex backlog estimated at slightly over $5 billion.
CBN Moves Against 55 Companies, Individuals for Forex Infractions
CBN Commences Investigation into FX Activities of 55 Companies, Individuals
In an effort to ease foreign exchange pressure and better manage the dwindling foreign reserves, the Central Bank of Nigeria has intensified fight against companies and individuals taking advantage of the nation’s limited foreign reserves.
The apex bank said it has commenced investigations into the activities of 55 companies and individuals engaging in foreign exchange transactions.
The central bank attributed the reason for the investigation to foreign exchange deals outside the official Investors & Exporters (I&E) forex window.
Some of the companies being investigated are Stallion Nigeria Limited, Interswitch Nigeria Limited, as well as a leading global shipping line, CMA CGM Nigeria Shipping Limited.
Other big names on the list are Petro-Afrique Energy Services Limited, Steel Force Far East Limited, Auto Petroleum Company Limited, Cavendish Mechanicals Limited, Aquashield Oil & Marine Limited, Haitch & Elf Integrated Services Limited, Fenog Nigeria Limited, and Promasidor Nigeria Limited.
The I&E window was established to facilitate foreign exchange transactions and encourage a moderate market-determined exchange rate.
Naira Declines to N465 Against US Dollar on Black Market
Naira Falls to N465 Against US Dollar on Black Market
Nigeria’s economic uncertainties continued to weigh on the Nigerian Naira despite the Central Bank of Nigeria’s forex sale resumption.
The local currency declined by N3 from N462 a US dollar to N465 on the black market even with over $58 million injected into the forex market through the bureau de change.
Against the British Pound, Naira depreciated by N5 from N595 to N600 on Friday while it dipped by N3 against the European common currency to N548, down from N545 it traded on Thursday.
A series of weak economic fundamentals and anti-people policy continued to hurt the nation’s economic outlook and investors’ confidence.
In a recent event, the Nigerian government simultaneously raised electricity tariffs, pump prices and foreign exchange rates in an economy that depends on imports for most of its supplies.
Also, with the unemployment rate at over 27 percent, inflation rate over 13 percent and the number of companies shutting downing operation rising on a daily bases, foreign investors and even local investors are now holding back on investments needed to support the nation’s weak foreign reserves and cushion the negative effect of COVID-19.
While the exchange rates have moderated slightly from COVID-19 peak, it remains close to COVID-19 record.
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