The Naira depreciated at the official and parallel markets amid growing concerns that oil revenue fluctuation and global monetary tightening would lead to further devaluation of the national currency.
Official data and trading reports showed that the Naira depreciated by 0.12 per cent at the official Investors and Exporters (I & E) Window to close at N416.50 per dollar. It also depreciated by 0.65 percent to close at N575.90 per dollar at the parallel market. The Naira, however, closed flat at N430 per dollar at the Interbank Foreign Exchange market (IFEM).
The Central Bank of Nigeria (CBN) continued its weekly injection of$210 million; distributing $100 million to the Wholesale Secondary Market Intervention Sales (SMIS), $55 million to Small and Medium Scale Enterprises (SMEs) and $55 million to invisibles.
Analysts at Cowry Asset Management, which actively trades in financial instruments, said they expected the Naira to depreciate further in the new week as investors react to changing global dynamics
Analysts at Cordros capital noted that although the CBN might have enough supply to support the foreign exchange market over the short term, global and domestic challenges may force the apex bank to adjust the Naira exchange rate further
Supply levels in the I & E Window will be needed to sustain forex liquidity levels. About 53.8 per cent of forex inflows to the I & E Window in 2019 were from FPIs.
“Hence, we think further adjustments in the Naira/Dollar peg closer to its fair value and flexibility in the exchange rate would be significant in attracting foreign inflows back to the market,” Cordros capital stated in a weekend note.