FX Rates Worsen as Naira Struggles to Find Balance
In the foreign exchange market, the Naira showed a lacklustre performance against the US dollar, depreciating by 0.1% in the official market to close at N832.32.
For 2023, some analysts said they don’t see the local currency ending strong despite the recent FX backlog settlement by the apex bank.
Apparently, there exists large gap between foreign currency logged by manufacturers, importers and other authorised FX used that market supply.
This imbalance, or what economists call disequilibrium points between forces of demand and supply has Nigerian naira greatest undoing. And the government effort has not paid off, instead the local currency has continue to lose its allures.
Weak exports based and strong appetite for foreign goods and services remain downside to naira recovery, research analysts at LSintelligence Associates insist.
Noting that the naira is under price, analysts said lack of economic nationalism will keep the local currency under pressures until the apex bank design a new currency program.
“As you must have seen, June devaluation has failed, and it is unlikely to achieve the reason while the central bank chose to bite the bullet.
“The devaluation intent was taken to help closed the gap between official and parallel market rates, unfortunately, the problem exists – and Nigerians are poorer than ever.
“There is also a shift in balance sheet positions of some companies, possibility, there are banks that are far behind regulatory score but have to be ring-fenced by the CBN because of FX reforms”, LSintelligence said in a chat with Nairalaw.com.
In the parallel market, the Naira depreciated by 0.17% day-on-day to close at N1,162 per dollar due to sustained demand for the dollar. External reserve remains on tight rope even with oil price recovery.
In the global commodity market, oil prices experienced a positive trend, with Brent Crude trading at $83.71 per barrel and WTI at $ 78.61 per barrel on Thursday. Reps begin reviewing 2024-2026 MTEF, Fiscal Strategy
This followed OPEC+’s preliminary agreement to implement an additional daily oil-supply cut of 1 million barrels, addressing concerns of oversupply and economic challenges in the oil market.
The specific allocation of cuts among members and the impact of Russia’s export reduction are pending a vote at the meeting.
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