Naira Reclaims Value, Black Market Rate Steadies
Exchange rates closed in a mixed direction in the foreign exchange markets as demand for the US dollar was met with adequate supply. Data from the FMDQ platform showed the Naira strengthened against the greenback, trading at N831.47 to the dollar in the official market, from N881.88 per dollar.
Nigeria’s gross external reserve declined further to $33.068 billion amidst government’s renewed interest in foreign loans. The amount in gross external reserve provides import cover for seven months, analysts said.
The Naira’s bearish trend has persisted even after a large official devaluation of the local currency in June 2023. The central bank has reiterated optimism over improved forex supply as it plans to gradually clear FX forward backlog.
In the parallel market, the Naira held steady from the previous session rate at N1,160 amidst year-end demand for import payments.
External reserve hovered around $33.2 billion amidst a slowdown in forex inflow into Nigeria, data from the central bank website shows. Nigeria has improved on oil production output and currently seeking a higher quota from OPEC and allies members for 2024.
With an increased spending plan, analysts said Nigeria must pump more oil to deliver 2024 budget plan. In the global commodity market, Brent Crude rose by 0.66% to trade at $82.22 per barrel, while the WTI Crude also increased by 0.62% to $76.88 per barrel.
All eyes are on OPEC+ as the oil group is set to meet later today to discuss output policy for 2024. Analysts said there are growing expectations that they could make deeper supply cuts, which would be in addition to the rollover of the voluntary cuts from Saudi Arabia and Russia.
Clearly, this growing expectation leaves downside risk for the market if OPEC+ disappoint. Adding to the uncertainty from the meeting is that it is still not clear if the group has been able to resolve a disagreement over Angolan and Nigerian production targets for next year.
Naira Devaluation Deepens Economic Crisis in Nigeria
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