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The Nigerian local currency, the Naira, slumped to N446.38 at the investors’ and exporters’ foreign exchange window, an official platform for manufacturing concerns. In the parallel market, the exchange rate also worsened to N745 amidst year-end demand for foreign currencies.
At the investors’ window, the open indicative rate closed at N445.40 to the dollar on Tuesday (December 13, 2022). An exchange rate of N452 to the dollar was the highest rate recorded within the day’s trading before it settled at N446.38.
The naira sold for as low as 440 to the dollar within the day’s trading. A total of N72.15 million was traded at the official Investors and Exporters window on Tuesday (December 13, 2022). The disparity has now widened the gap between the Nigeria Autonomous Foreign Exchange Fixing (NAFEX) and the parallel market rate to about 70%.
A sloppy exchange rate has impacted costs of production across key industries and companies are recording FX losses in their books due to self-repricing at the FX market, while foreign reserves drop.
The official figure from the Central Bank of Nigeria shows that gross external reserve has now declined below $37 billion as receipts from oil exports remain unimpressive. Though, volume production improve, prices of crude oil have come under pressure lately due to an economic quagmire in top oil-consuming nations – especially China.
At the official window, the naira depreciated by 0.1% to close at N446.38 on Tuesday as the market slips to disequilibrium between demand and supply of foreign currencies. Last week, the Nigeria autonomous foreign exchange fixing (NAFEX) rate traded within the range of N426.0-452.0 but eventually closed at N446.5.
This translates to a 0.3% devaluation of the naira at the market level when compared with its previous trade position. In the forwards market, FX traded within the range of N447.0-462.7.
In the 1-month contract, the naira appreciated moderately to N460 and in the 3-month contract, gained +0.4% to close at N469.9. In the retail secondary market intervention sales (SMIS) market, the FX spot rate remained unchanged at N445.
The parallel market rate has remained relatively stable, but there was moderate pressure at the space on Tuesday amidst intermittent exchange rate movements. The volume of dollars traded in the official market increased moderately, according to data from FMDQ, up 1.9% to $162.2 million as of Friday.
Analysts said the NAFEX window recorded an inflow of $494 million. Of the sum, CBN accounted for 1.2%, FPIs accounted for 0.4%, non-bank corporates accounted for 28.9%, exporters accounted for 68.4%, and others accounted for 1.1%.
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