Nigeria: Naira Depreciates to N460/$1 at the Parallel Market

• The Naira has fallen against the dollar as it depreciated to N460 to a dollar at the parallel market, popularly referred to as the black market.
• This represents about 1.1 per cent depreciation compared to N455 to a dollar it sold the day before.
• However, the local currency seems to have performed better against the pounds sterling as it sold for N540 to one pound sterling compared with the N545 it traded the day before.

The Naira, on Tuesday, May 19, 2020, has fallen against the dollar as it depreciated to N460 to a dollar at the parallel market, popularly referred to as the black market. This is amid the uncertainty which persists in the foreign exchange market.

According to information from Aboki fx, this represents about 1.1 per cent depreciation compared to N455 to a dollar it sold the day before.

Nevertheless, the local currency seems to have performed better against the pounds sterling as it sold for N540 to one pound sterling compared with the N545 it traded the day before.

The depreciation in the parallel market comes against the backdrop of a surprising $90 million – $100 million injections into the foreign exchange market via the Central Bank of Nigeria’s (CBN) Wholesale Secondary Market Interventions. This is intended to help boost market liquidity and, in the short term, support the Naira.

READ ALSO: Nigeria Naira Appreciates at I&E window, hits N384 to $1

The depreciation in the parallel market also compares with the stability in the exchange rate movement at the buyers and exporters window as it was still N386.33 to a dollar given the rapid fall in the regular market turnover at the window to $8.67 million.

The increase in crude oil prices and the IMF’s $3.4 billion inflow are expected to be a significant boost for the foreign-exchange market. In recent weeks, the country’s foreign reserves seem to have had some optimistic changes, as it now stands well above $35 billion.

In a bid to preserve the scarce foreign exchange that the CBN Governor, Godwin Emefiele, insisted that the apex bank will not sell dollars to companies for the import of items that could be produced locally.