Tuesday, 12 December 2023 04:44

Liquidity drops 48% at official forex market, pushing Naira further down - Bloomberg

Rate this item
(0 votes)

Naira weakened sharply on the official market against the dollar, pushing it above levels on the unauthorized parallel market despite government promises to stem volatility.

The currency slumped 23% to 1,099 naira per dollar on the official market on Friday, according to Lagos-based FMDQ, amid a local shortage of the greenback.

That was slightly cheaper than the naira’s level on the parallel market on Monday of 1,190, according to Umar Salisu, a trader who compiles the data in the commercial hub, Lagos.

Naira Turnover Falls

Liquidity in the official market dropped 48% to $71 million before the weekend, according to the investment bank Chapel Hill Denham.

The weakness was despite news Friday that Moody’s Investors Service had lifted the outlook on Nigeria’s Caa1 credit rating to positive, based on steps the West African nation has taken to improve its fiscal position and shore up foreign reserves.

The naira’s two exchange rates briefly converged in June at around 757 per dollar, after President Bola Tinubu eased complex currency controls to boost foreign investment. But it’s been on a steady slide ever since amid a persistent lack of local access to dollars.

Central Bank Governor Olayemi Cardoso in November pledged to clear forward foreign-exchange contracts that have discouraged investor inflows, crimped liquidity and weighed on the currency.

The promise helped to steady the parallel market by encouraging residents who had been hoarding dollars to sell them to avoid losses. But liquidity in the much larger official market has remained constrained.

“Lack of liquidity is causing volatility, challenges in price discovery and stability in the official market,” said Ayodeji Dawodu, head of Africa sovereign and corporate credit research at BancTrust & Co. in London.

While the central bank wants the two rates to converge, at current levels the naira is significantly weaker than the official level of 750 per dollar used as a benchmark for the country’s 2024 budget.

The benchmark exchange rate will be far-fetched, unless “we see significant inflows from foreign investors and government agencies,” Dawodu said.

 

Bloomberg

March 16, 2025

Petrol price war drives marketers to reduce purchases as losses mount

A price war between Dangote Petroleum Refinery and the Nigerian National Petroleum Corporation Limited (NNPCL)…
March 16, 2025

El-Rufai speaks further on Tinubu’s presidency, Chicago scandal, other issues

Former Kaduna State Governor Nasir El-Rufai has revealed that he and other political leaders were…
March 14, 2025

How leaders train themselves to rethink and adapt faster

Paola Cecchi-Dimeglio Recognizing the value of rethinking is one thing—making it a habit is another.…
March 01, 2025

Man offers to split $525,000 jackpot with thieves who stole his credit card to buy…

A Frenchman appealed to the homeless thieves who stole his credit card to buy a…
March 14, 2025

Gunmen invade Kaduna communities, abduct 10

Suspected bandits have abducted ten villagers from three remote communities in Kajuru Local Government Area…
March 16, 2025

Here’s the latest as Israel-Hamas war enters Day 527

Freed Israeli hostage speaks for the first time about his 505 days of surviving Hamas…
March 15, 2025

Humanoid robot with human-like competence unveiled in China

Du Qiongfang Humanoid robot manufacturer AgiBot in Shanghai unveiled on Tuesday its latest humanoid robot…
January 08, 2025

NFF appoints new Super Eagles head coach

The Nigeria Football Federation (NFF) has appointed Éric Sékou Chelle as the new Head Coach…

NEWSSCROLL TEAM: 'Sina Kawonise: Publisher/Editor-in-Chief; Prof Wale Are Olaitan: Editorial Consultant; Femi Kawonise: Head, Production & Administration; Afolabi Ajibola: IT Manager;
Contact Us: [email protected] Tel/WhatsApp: +234 811 395 4049

Copyright © 2015 - 2025 NewsScroll. All rights reserved.