Further Crash in Crude Oil Price to Weaken Naira

By Dipo Olowookere

There are indications that the value of Naira may depreciate against the Dollar this week at the foreign exchange (forex) market due to situations at the global market for crude oil.

In recent times, the United States and China have been having it rough, with both economic powers of the world slamming different tariffs on each other, affecting the global economy.

In its report at the weekend, Lagos-based investment company, Cowry Asset, said with the unstable nature of the price of the black gold, the local currency should suffer for it this week.

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

Last week, the exchange rate between the Naira and the Dollar was unchanged at most foreign exchange market segments.

Specifically, the NGN/USD exchange rate remained unchanged at the Bureau De Change and the parallel (black) markets to close at N358.00/$ and N360.00/$ respectively.

Also, the Naira closed flat against the US dollar at N357.96/$ at the interbank forex market amid sustained weekly injections of $210 million by the Central Bank of Nigeria (CBN) into the 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.

However, the local currency appreciated at the Investors and Exporters FX Window by 0.08 percent to close at N363.14/$.

Meanwhile, the Naira also depreciated further against the Dollar for most of the foreign exchange forward contracts – spot rate, 2 months 3 months, 6 months and 12 months rates by 0.02 percent, 0.06 percent, 0.18 percent, 0.28 percent and 1.05 percent to close at N306.95/$, N370.83/$ N374.47/$, N388.23/$ and N408.36/$ respectively.

However, the local currency appreciated against the Dollar for the one-month forward contract by 0.02 percent during the week to close at N367.07/$.