Renewed Naira Depreciation Begins As Market Turnover Drops By 25%
There are indications that one other spherical of Naira depreciation has set in following renewed demand strain amidst widening provide hole.
The Naira yesterday depreciated to N1,635 per greenback within the parallel market from N1,625 per greenback final weekend.
Nevertheless, information from FMDQ Trade confirmed that the indicative trade fee for Nigerian Autonomous Overseas Trade Market (NAFEM) fell to N1,585.77 per greenback from N1,598.56 per greenback final weekend.
Consequently, the margin between the parallel market and NAFEM fee widened to N49.23 per greenback from N26.44 per greenback final weekend.
The renewed strain on trade fee within the parallel market, in line with sellers, was because of decline in greenback provide on the official finish of the market mirrored by NAFEM.
Findings by Financial Confidential present that quantity of {dollars} traded (turnover) available in the market declined by 58.8 % yesterday to $71.18 million from $172.8 million traded final week Friday.
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Month-on-month (MoM ) the amount fell 25 % to $3.25 billion in August from $4.34 billion in July 2024.
Parallel market operat ors stated the trade fee rose yesterday because of elevated demand however that they didn’t obtain a corresponding enhance in provide.
On the backdrop of the provision hole present that Nigeria’s overseas reserves dropped misplaced $490 million through the evaluate interval.
Knowledge from the CBN overseas trade reserve confirmed that the reserve fell by 1.3 % MoM to $36.3 billion as at twenty eighth of August from $36.79 billion as at July thirty first, 2024.
Analysts within the monetary sector had attributed the decline to CBN’s intervention within the FX market in an effort to stabilise the Naira.
Nevertheless, of their month-to-month market report for August, analysts at Afrinvest West Africa Restricted, a Lagos primarily based funding home, stated they anticipate the naira to depreciate in opposition to the greenback because of a peak in Enterprise Journey Allowances, PTAs and Enterprise Journey Allowances, BTAs.
They said: “Within the absence of great influx to spice up FX provide, we anticipate the naira to be pressured within the month, because of the seasonality impact, as PTAs and BTAs demand peaks.”