Naira Declines Amid Lower Dollar Inflows
On Tuesday, the naira lost value against the dollar in both the official and parallel markets. This decline followed a drop in dollar inflows last week.
In the Nigerian Foreign Exchange Market (NFEM), the naira slipped by 0.3%, falling from ₦1,528.03 on Monday to ₦1,532.94 per dollar on Tuesday. According to data from the Central Bank of Nigeria (CBN), dealers quoted the highest rate at ₦1,549.50, slightly stronger than Monday’s ₦1,552 per dollar.
The lowest exchange rate recorded on Tuesday was ₦1,522.70 per dollar, a slight dip from the ₦1,512 recorded the previous day.
Black Market Sees Further Depreciation
In the parallel market, commonly called the black market, the naira closed at ₦1,580 per dollar, reflecting a ₦5 loss from Monday’s ₦1,575 rate.
Despite this, the naira gained ₦10 against the British pound, with rates shifting from ₦2,050 on Monday to ₦2,040 on Tuesday. It remained stable at ₦1,700 per euro and ₦1,150 per Canadian dollar. Meanwhile, the Chinese yuan traded at ₦1,215 in the black market.
FX Inflows Drop by 25%
The official forex window recorded an inflow of $1 billion last week, reflecting a 25.4% decline from the previous week’s $1.34 billion, according to a report by Coronation Asset Management.
Market experts suggest that this reduction in dollar supply contributed to the naira’s weakening, making foreign exchange transactions more expensive.
Oil Market Challenges Add Pressure
An explosion on the Trans-Niger Pipeline, one of Nigeria’s largest crude pipelines, has raised economic and environmental concerns. Analysts fear this disruption could further weaken the naira in the foreign exchange market.
Adding to the uncertainty, Nigeria’s oil exports face setbacks. As of March 10, 12 March-loading crude cargoes remained unsold, highlighting low global demand for Nigeria’s crude. Much of April’s export schedule also remained available, according to Argus data.
Oil Prices Experience Volatility
Global oil markets have been highly volatile, influenced by factors like:
- Weak demand for crude
- Rising trade tensions between the U.S. and major trading partners
- OPEC+ increasing production quotas
A report by Afrinvest Securities Limited revealed that Brent crude prices fell by 2.4% week-on-week, dropping from $72.49 per barrel to $70.82.
