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The Nigerian naira has witnessed a further decline in value, primarily driven by heightened demand pressures in both the official and parallel foreign exchange markets. The aftermath of an Islamic holiday saw negative movements in exchange rates, underscoring the persistent foreign currency shortage within the economy.
The local currency’s ongoing depreciation is a consequence of the imbalance between the demand for foreign currency, driven by import requirements, private sector transactions, and individual needs, and the availability of foreign exchange.
Data from the FMDQ platform revealed a significant depreciation of the Nigerian naira against the US Dollar in the investors’ and exporters’ forex window. The currency recorded a 2.68% decline, closing at N775.31.
Despite the recent announcement of the new Central Bank of Nigeria (CBN) Governor, demand pressures have continued to mount in various forex markets, exacerbating the naira’s challenges.
In the parallel market, the naira faced a depreciation of 0.80%, closing at a new low of N1,008, according to reports. Some traders expressed concerns about their diminishing foreign currency reserves, unable to meet the rising demand from invisible users.
In the commodities market, West Texas Intermediate (WTI) crude oil futures experienced a minor dip to $90.05 per barrel, with traders opting to take profits amidst various macroeconomic factors affecting oil prices. On the other hand, Brent Crude closed at $93.17 per barrel, driven by bargain hunting and concerns over interest rates.
Analysts remain pessimistic about the outlook for the Nigerian naira, as there appear to be no imminent signs of relief. The Central Bank’s participation in the Investors and Exporters Fx window has been limited, potentially linked to the recent devaluation of the local currency.
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