Naira slides to N461.90/$ as demand for dollar soars

*Naira devaluation by 1.2% improves rate in parallel market-Afrinvest

By Temitope Adebayo

The Nigerian local currency, the naira traded at N461.90 on Friday in the Investors’ and Exporters’ foreign exchange (FX) window amidst rising demand for the United States dollar for imports.

In 2022, Naira lost about 11% following a negative net position in the foreign exchange market. Monetary authority’s intervention weakened despite relatively strong gross external reserves.

In 12-month, Nigeria’s gross foreign reserves fell by $3.4 billion at a time when foreign receipts from oil exporters were down due to poor volume production.

The external reserve balance has been on a free fall, declining to USD37.09 billion in December 2022 – from USD40.52bn as at the start of the year – as the high petroleum subsidy bill and low accretion from non-oil sources have continued to deplete the FX reserves.

Local banks have stopped dollar spending via debit cards, thus raising the demand level in the parallel market, though better than the exchange rate seen following spurious purchases after the new note design last year’s announcement.

At the investors’ window, the naira was exchanged at N461.90 per United States dollar, representing a 0.16 per cent depreciation, compared with the 461.17 it exchanged on Thursday.

Data from Investors’ foreign exchange market shows that the open indicative rate closed at N461.20 to the dollar on Friday. Traders reported that an exchange rate of N462 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.90.

Meanwhile, the Nigerian naira sold for as low as N440 to the dollar within the day’s trading. A total of N72.18 million was traded at the official Investors and Exporters window on Friday.

In a market brief, Afrinvest alluded that the Central Bank of Nigeria (CBN) made an upward adjustment to naira at the Investors and Exporters FX window in December 2022.

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Analysts wrote that the apex bank’s decision to devalue the naira by 1.2% to ₦451.21/$1.00 in December contributed to the modest improvement in the exchange rate in the parallel market.

On Friday, the FX spot price fiasco continued at the open parallel market window as the rate tanked by 0.4% or N3 week on week to N745 from N732.

Meanwhile, volume of dollar transacted at investors window increased by 9.5% from beginning of the week to $409.97 million on Thursday.