Naira Tumbles by 0.39% Against Dollar, Traders Quote New Exchange Rates

• The naira has depreciated against the US dollar once again in the official and unofficial foreign exchange markets
• The new exchange rate data released by the CBN shows that the naira in the official market fell by N5 in the NFEM window
• The CBN has resumed intervention in the market, and there is an expectation naira will reverse its losses this week

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The naira depreciated against the United States Dollar in the Nigerian Foreign Exchange Market (NAFEM) on Monday, November 17.

Data from the Central Bank of Nigeria revealed that the naira closed on Monday at N1,448.03/$1, which is a N5.60 or 0.39% drop when compared to N1,442.43/$1 it was exchanged for last Friday.

It was a similar story for the Nigerian currency against the Pound Sterling in the official market.

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Nigeria’s FX inflows fall to $672m despite naira strengthening at both official and black markets

For pound sterling naira weakened by N10.27 to finish at N1,909.23/£1 compared with the preceding session’s rate of N1,898.96/£1.

It also lost 43 Kobo against the euro to settle at N1,678.99/€1, in contrast to the previous session’s closing price of N1,678.56/€1.

Naira in other FX markets

For international payments, GTBank forex sold the dollar at N1,447/$1, a N1 drop compared with the preceding session’s rate of N1,448/$1.

However, in the black market, traders confirmed to Legit.ng that the naira tumbled against the dollar.

Abdullah, a BDC trader, said:

"The naira is trading at N1,460 against the dollar, a N5 depreciation from N1,455 previously, N1,660 to N1,675 versus the euro, and N1,890 to N1,910 against the pound."

CBN to intervene in FX market

Even though total foreign exchange (FX) inflows rose sharply by 91% in October to about $6.1 billion, the naira has been under pressure in the past two weeks because the Central Bank of Nigeria (CBN) has been cautious about funding the market, while foreign investors are showing renewed interest in Nigerian assets.

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Naira starts new week low against US dollar despite rise in FX reserves

Recently, the CBN’s FX support has been small and irregular. Last week, it sold $50 million to help the market.

At the same time, FX inflows into the Nigerian market fell by 25.23% to $672.3 million from $899.2 million the previous week, after reaching $1.37 billion earlier in November.

It is now expected that the CBN will resume strong intervention in the market to ensure that the naira does not return to N1,600.

CBN cuts MPC rate

Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) decided to cut key interest rates by 50 basis points to 27%.

It marked the first reduction in five years, as inflation begins to taper. It also signalled further cuts if the disinflationary trend is sustained. The reduction followed a drop in Nigeria's inflation rate.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng