On Friday the scarcity of the dollar sent the value of Naira southwards by 4.6% compared to its value on Thursday.
$1 traded at N450 in the parallel market on Friday compare to N430/$1 on Thursday according to Aboki Fx as the supply of dollar continues to dwindle, due to low foreign exchange earnings for the highly oil dependent economy. However, the Naira remained unchanged against the GBP at N500 per GBP.
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Earlier in the week on Monday, U.S oil market saw its worst day in history as oil traders paid buyers to the oil off their hands. Nigeria banner oil Bonny light traded below $10 during week though it has recovered to trade above $17 but still significantly below the 2020 revised budget benchmark of $30/barrel.
Oil revenue is Nigeria’s main source of foreign exchange as it contributes about 90%.
With Coronavirus pandemic came an unimaginable crisis in the oil industry which has seen the demand for oil slump dramatically. This slump in demand triggered the slump in prices and was fueled by Saudi Arabia Vs Russia oil price war.
Tremendous pressure has been put on the external reserve due to CBN’s effort to avert the devaluation of naira (despite “technical devaluation” in April), these efforts in the form of interventions in the I&E window has resulted in it’s decline to N33.62 billion.