The value of Nigerian Naira on Tuesday continued to drop against the U.S dollar in the parallel market popularly known as the black market. Naira was traded at N460 per U.S Dollar according to Aboki fx. This is a 2% drop from its value of N450 per dollar on Monday. The value of Naira in the parallel market is N73 below the inter-bank rate of N387 on Monday.
On the other hand the naira also depreciated against the British Pounds. On Tuesday Naira was exchanged at N520 per £1
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The naira has been under immense pressure due to contracting foreign exchange earnings that is hugely affected by the declining oil prices. Nigeria’s main source of foreign exchange is the revenue from oil.
Remittances into the country which is another source of foreign exchange has been reduced as the income of those in diaspora is heavily affected by the lockdown and movement restrictions across the globe.
In march CBN devalued the Naira which saw the I&E window rate move from N360/$1 to N380.2/$1 while the official exchange rate moved from N306/$1 to N360/$1
On Tuesday, Nairametrics reported that naira forwards for 12 month traded at N509 per dollar on Monday. This significant decline in Naira value for forwards, shows that investors are confident that the value of naira 12 months from now would be at that level.
It is not just the naira that has been under threat, Nigeria’s foreign reserve has also been on a steady decline with a current value of $33.58 billion. With the persistent crisis in the oil industry which has seen oil prices plunge last week to the lowest never seen in history, it is hard to see a reversal on the trend in value of naira in the near future without serious intervention from the CBN. However, this intervention will reflect badly on the foreign reserve.
Written by;
Ifunanya Ikueze
