JP Morgan Gives Reasons Naira's Fall Against US Dollar Is Reasonable
- JP Morgan has shared insight into the naira performance against the United States dollar in the FX markets
- The Nigerian currency has depreciated in the last few days in both the official and unofficial forex markets
- Naira is not the only currency suffering losses as South Africa’s rand, China’s yuan, and India’s rupee also weakened
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.
Global financial services firm JP Morgan has weighed in on notable naira depreciation against the US dollar.
The naira plunged to a four-month low, exchanging above the N1,600 mark in the official and unofficial forex markets.
Source: Getty Images
In a note to clients about Nigeria, JP Morgan said that although the naira has depreciated in the midst of global market turbulence sparked by President Donald Trump's tariff announcements, the fall is reasonable compared to other frontier and emerging market currencies.
The investment bank explained that the naira's 3.6% decline against the dollar over the past week is within expectations, noting that at certain points, the currency had weakened by as much as 6.5%.
The investment bank praised the CBN's interventions, describing them as proactive and necessary to stop the naira's further depreciation, BusinessDay reports.
JP Morgan noted:
"The central bank has sold around $550 million into the market over the last week, a substantial increase from March's total of $1.0 billion.
We anticipate continued dollar sales as foreign portfolio outflows are expected to accelerate, with estimated holdings of at least $10 billion, much of which may not be immediately unwindable on the interbank market."
Source: Getty Images
Naira is not alone in the depreciation
The naira’s decline is not exclusive to Nigeria, as other frontier and emerging market currencies are also under pressure, with the rand, rupee, and yuan tumbling to record lows.
South Africa’s rand plunged on Wednesday to its weakest level ever against the US dollar as investors sought safe havens, hitting 19.9328 per dollar from 19.52 on Tuesday, according to Bloomberg.
In Asia, the Chinese onshore yuan slipped to its lowest point since December 2007, closing at 7.34 per dollar on Wednesday as Trump’s reciprocal tariffs took effect.
The Indian rupee also suffered, weakening to a three-week low after ending trade at 86.68 per US dollar, down nearly 0.5 %, according to Reuters.
New customs exchange rate to clear goods
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) has increased the customs duty rate, effectively making the cost of importing goods more expensive.
According to data from Nigeria's trade portal, on Friday, April 11, the CBN raised the exchange rate for clearing goods to N1,591.35 per dollar.
The Nigeria Customs Service (NCS) exchange rate for import duties collection has risen due to the performance of the naira against the US dollar in official forex markets.
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Source: Legit.ng
