The Nigerian naira ended today downbeat, losing about 12% day on day despite forex market intervention. Despite FX sales to local banks, exchange rate has been walking in dark as critics disagree with the Central Bank of Nigeria’s (CBN) willing buyer, willing seller FX model.
The monetary authority’s decision to float the naira must be supported by strong foreign currency inflows, otherwise, the future of the local currency would be unpalatable; a Broadstreet analyst told MarketForces Africa.
According to the research team at LSintelligence Associates, it is dangerous to think that the naira can withstand ‘a currency exchange rate ‘willing buyer, willing seller’ policy against the US dollar in a country where there is no comparative cost advantage, forcing its people and businesses to rely on imports.
Data from the FMDQ platform showed that the exchange rate ran amok against the US dollar at the Nigerian autonomous foreign exchange market to settle N1,484.75.
Investment firm, SAMTL limited, hinted in its market update that the apex bank intervened in the forex market without mentioning the amount. The central bank has been selling foreign currency to local deposit money banks to saturate liquidity level at the official market.
The FX market’s demand pressure today resulted in a 11.66% daily depreciation of the naira. On the other hand, exchange rate clawback losses in the parallel market.
At the informal currency market on Thursday, the naira strengthened by 2.06% to close at N1,425 per US dollar. In the global commodity market, WTI crude futures and Brent crude prices were at $78.62 and $82.89 per barrel, respectively.
