Naira slides further against Dollar as forex scarcity heightens

Naira has further depreciated against the US dollar to close at N411.07 to a dollar, representing a 0.08% loss compared to N410.75/$1 recorded on Friday, 4th June 2021 at the official Investors and Exporters window.

The local currency however remained stable against the US dollar on Monday at the parallel market to close at N502 to a dollar. This was the same rate that was recorded on Friday, June 4, 2021.

The opening indicative rate closed at N411.08/$1 on Monday, representing a 4 kobo gain when compared with the N411.12/$1 recorded on Friday, 4th June 2021.

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An exchange rate of N420.73 to a dollar was the highest rate recorded during intra-day trading before it closed at N411.07/$1, while it also sold for as low as N400/$1 during intra-day trading.

Forex turnover at the Investors and Exporters (I&E) window dropped by 34.45% on Monday, June 7, 2021.

Data from FMDQ revealed that forex turnover declined from $230.93 million recorded on Friday, 4th June 2021 to $151.37 million on Monday, 7th June 2021.

The dollar supply dropped by 34.5% as the Central Bank of Nigeria announced an increase of forex allocation to deposit money banks for SMEs, travellers, and others, in order to boost liquidity.

Meanwhile, Nigeria’s external reserve has continued to decline, as it dropped by $21 million on Monday, 7th June 2021 to close at $34.170 billion, representing a 0.06% decline when compared to $34.191 billion recorded on Friday, June 4, 2021.

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Nigeria’s foreign reserve has lost about $1.199 billion year-to-date, having recorded declines consecutively for 31 days.

The current position also represents the lowest level in over one year. The last time Nigeria’s foreign reserve position was this low was 7th May 2021, when it stood at $31.19 billion.

The decline can be attributed to a drop in crude oil export arising from the reduction in the purchase of Nigeria’s crude oil by India, a major importer of Nigerian crude and a nation currently burdened by a second wave of the covid-19 pandemic.