Drop in FX Supply Weakens Naira to N462/$1 at Black Market

By Adedapo Adesanya

The foreign exchange (forex) market in Nigeria is beginning to witness another shortage in liquidity, especially at the parallel market and this is making speculators have a field day.

The performance of the Naira against the United States Dollar at the market window in the past sessions is already giving observers another major concern as the value of the local currency is weakening by the day.

On Wednesday, the domestic currency continued its abysmal performance against its American counterpart, losing N1 to sell at N462/$1 at the close of transactions.

At the previous session, the value of the Nigerian currency had closed at N461/$1 and from an analysis of the day’s trading, the shortage of FX made some traders ration what they have.

If the supply of forex continues to decline, the black market could witness another artificial scarcity, thereby crashing the Naira against the Dollar.

On Monday, the Naira closed at N460/$1 and the next day, it depreciated to N461/$1 and went down to N462/$1 on Wednesday.

During trading yesterday, the value of the local currency to the British Pound Sterling significantly went down by N8 at the parallel market to N600/£ from N592/£ it was sold the preceding day.

Equally, the local currency depreciated against the Euro at the midweek session by N2 to trade at N540/€1 compared to N538/€1 it sold on Tuesday.

At the Investors and Exporters (I&E) segment of the FX market. the value of the Naira to the US Dollar, however, appreciated by 0.04 per cent or 17 kobo to N385.83/$1 as against N386/$1 it was exchanged during the preceding session.

According to data from the FMDQ Securities Exchange, the low trade activity contributed to the gains recorded by the Nigerian currency as forex worth $29.53 million was traded at the session compared with the previous session’s $79.53 million, indicating a decline in the day’s turnover by $50 million or 62.9 per cent.

A look at the Bureaux De Change (BDC) segment of the market showed that yesterday, the Naira to Dollar exchange rate at the various locations tracked; Lagos, Abuja, Kano and Port Harcourt, remained stable at N386/$1, the rate the Central Bank of Nigeria (CBN) authorised operators at the window to trade the currency.

At the interbank market, the value of the Naira against the greenback remained unchanged on Wednesday at N379/$1.