The value of the naira continued on its downward spiral at all ends of the market as it closed last week losing N10 to sell at N495 to the dollar in the parallel market, a situation analysts said would continue this week.
It had begun depreciating on Tuesday last week following the acceptance of the Nigeria Autonomous Foreign Exchange (NAFEX) rate by the Central Bank of Nigeria (CBN). At the NAFEX window, the value of the naira depreciated slightly to N412 to the dollar compared to N410 when it opened the week’s trading activities.
The CBN governor, Godwin Emefiele had, at the end of the monetary policy committee (MPC) meeting in Abuja on Tuesday, confirmed that the change in the official exchange rate to NAFEX rate was necessitated by the fact that government transactions were no longer consummated using the official exchange rate.
Emefiele noted that transactions are rather benchmarked against the NAFEX rate, reiterating that Nigeria still operates a managed-float exchange rate regime.
Consequently, the value of the naira which had depreciated slightly on Tuesday to N486 to the dollar was down to N493 as at Wednesday and further slid to N495 on speculation of a further devaluation of the naira.
The CBN had earlier this month removed the N380 per dollar exchange rate from its website spurring rumour of a pending devaluation.
At the end of the week, total turnover increased by more than 125 per cent to $1.26 billion, with trades consummated within the N400 and 430 to the dollar band.
In the Forwards market, the rate weakened across the 1-month (-0.1% to N413.71/$), 3-month (-0.3% to N420.39/$), 6-month (-0.3% to N429.40/$) and 1-year (-0.5% N447.56/$) contracts.
Meanwhile the 30-days moving average of foreign reserves dipped slightly by 0.3 per cent to $34.24 billion as at May 27, 2021 despite a 5.1 per cent increase in the price of Brent crude, a position analysts hope to turn around.
The expected turnaround was hinged on expectations that reopening economies and higher travel numbers in the US and Europe would boost fuel demand outweighed concerns about the coronavirus spread in parts of Asia.
At the money market end, rates fell as system liquidity closed at N486.5 billion.
Disclaimer: The Post Naira Weakens Further As Reserves Dip was first Published by Bukola Idowuon leadership.ng.