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Naira continues free fall, CBN’s offer falls short of demand
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continously falling...
The naira, the domestic currency, has continued to slide at the foreign exchange market as the Central Bank of Nigeria (CBN) is not enthusiastic at satisfying the demand market
The value of the naira appreciated marginally at the inter-bank market during the week, while depreciating at the official and parallel market.
In the inter-bank market, the value appreciated by 18 kobo to close the week at N118.06/$1, up from N118.24/$1 in the preceding week.
In the official market, the value lost by 1 kobo to close at N116.81/$1, down from N116.80/$1 in the previous week. It lost N1.40 kobo in the parallel market to close the week at N121.50/$1, down from N120.10/$1 in the previous week.
In the previous week, the currency at the inter-bank market depreciated from N118.09 to N18.24, after an initial 1 kobo loss in the week before, while in the parallel market, the it depreciated 10 kobo from N120.00 to N120.10.
Thus, for the three consecutive weeks, the it has shed value at least in one of the three markets, before the recent 140 kobo lost in the parallel market.
Business Day investigations reveal that exchange rates are still looking southward this week, particularly in the parallel market.
Also, the fall has been attributed to pick up of economic activities for the year 2008, as well as the return of Diaspora Nigerians.
Available information from the latest CBN monthly Economic report, indicates that Nigeria is in a favourable balance of payment position; thus the direction of the official exchange rate in the short-term will depend on the amount of foreign exchange the CBN is willing to sell at the Wholesales Dutch System (WSA).
At the first foreign exchange auction held on Monday, the total amount offered was $60million while a total of $106.19million was sold. At the second auction, the amount offered was $60million while $42billion was sold.
The amount of foreign exchange sold during the week was 123.49 percent of the amount offered. This is an indication that the amount demanded was in excess of the amount offered and this situation led to a marginal depreciation in the value of naira at the official market.
“Our review of the foreign exchange market last week revealed that there is excess demand in the market than the CBN was willing to sell, thus causing depreciation in the value of naira”, said the FSDH Weekly.
Analysts are not too sure if the decision to meet demand in the foreign exchange market is not deliberate by the apex bank.
It will be recalled that, as much as the appreciation of the is good, Razia Khan, regional director research with Standard Chartered Bank has said that the appreciation hurt the country’s economy in some other areas.
She cited the case of Nigeria’s revenue from crude oil, which when converted to naira shrinks automatically.
In the inter-bank market, the value appreciated by 18 kobo to close the week at N118.06/$1, up from N118.24/$1 in the preceding week.
In the official market, the value lost by 1 kobo to close at N116.81/$1, down from N116.80/$1 in the previous week. It lost N1.40 kobo in the parallel market to close the week at N121.50/$1, down from N120.10/$1 in the previous week.
In the previous week, the currency at the inter-bank market depreciated from N118.09 to N18.24, after an initial 1 kobo loss in the week before, while in the parallel market, the it depreciated 10 kobo from N120.00 to N120.10.
Thus, for the three consecutive weeks, the it has shed value at least in one of the three markets, before the recent 140 kobo lost in the parallel market.
Business Day investigations reveal that exchange rates are still looking southward this week, particularly in the parallel market.
Also, the fall has been attributed to pick up of economic activities for the year 2008, as well as the return of Diaspora Nigerians.
Available information from the latest CBN monthly Economic report, indicates that Nigeria is in a favourable balance of payment position; thus the direction of the official exchange rate in the short-term will depend on the amount of foreign exchange the CBN is willing to sell at the Wholesales Dutch System (WSA).
At the first foreign exchange auction held on Monday, the total amount offered was $60million while a total of $106.19million was sold. At the second auction, the amount offered was $60million while $42billion was sold.
The amount of foreign exchange sold during the week was 123.49 percent of the amount offered. This is an indication that the amount demanded was in excess of the amount offered and this situation led to a marginal depreciation in the value of naira at the official market.
“Our review of the foreign exchange market last week revealed that there is excess demand in the market than the CBN was willing to sell, thus causing depreciation in the value of naira”, said the FSDH Weekly.
Analysts are not too sure if the decision to meet demand in the foreign exchange market is not deliberate by the apex bank.
It will be recalled that, as much as the appreciation of the is good, Razia Khan, regional director research with Standard Chartered Bank has said that the appreciation hurt the country’s economy in some other areas.
She cited the case of Nigeria’s revenue from crude oil, which when converted to naira shrinks automatically.
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