Drop in Oil Price Weakens Naira Across Market Segments

August 11, 2019
naira and dollar

The Naira depreciated against the Dollar this week at most segments of the foreign exchange (forex) market amid drop in crude oil price, analysts at Cowry Asset have said in their report.

Notably, the local currency lost 0.24 percent at the Investors and Exporters (I&E) window in the week to close at N363.44/$. This was as the foreign portfolio investors demand for the greenback increased during the five-day trading week.

In the same vein, the Naira depreciated by 0.28 percent at the Bureau De Change (BDC) and the parallel (black) market by 0.28 percent each to close at N358.00/$ and N360.00/$ respectively.

However, the Naira closed flat against the US dollar at N306.90/$ at the interbank segment of the market amid the sustained weekly injections of $210 million by CBN into the foreign exchange market via the Secondary Market Intervention Sales (SMIS), of which: $100 million was allocated to Wholesale SMIS, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

Meanwhile, the Naira depreciated against the Dollar for all of the foreign exchange forward contracts – spot rate, 1 month, 2 months 3 months, 6 months and 12 months rates weakened by 0.02 percent, 0.43 percent, 0.57 percent, 0.67 percent, 0.96 percent and 0.71 percent to close at N306.90/$, N366.70/$, N369.87/$ N373.01/$, N384.10/$, N402.89/$ respectively.

“In the new week, we expect depreciation of the Naira against the Dollar across the market segments despite CBN sustained special interventions given the fear of further crash in crude oil price,” Cowry Asset said.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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