Naira depreciates to N462 at investors, exporters FX window

Exchanged at N462 per United States dollar, the Naira falls across the foreign exchange market after the Central Bank of Nigeria (CBN) monetary policy committee hiked benchmark interest by 100 basis points to 17.50%.

The market, however, reacted negatively with selloffs seen in the Nigerian Exchange, same time currency traders experienced a surge in demand for foreign currencies ahead of the deadline for old naira note acceptance for transactions.

Foreign currencies have become scarce given persistent demand by Nigerians – both individuals and corporates. The central Bank of Nigeria, CBN, has limited ability to upstream foreign currency. The apex bank capital control has raised the FX backlog.

Meanwhile, Broadstreet has indicated their lack of optimism over a possible recovery of the local currency from free falling across the market due to a dearth of FX inflow supports. Though the Nigerian government has to upgrade oil production volume, fluctuations in global prices of crude oil have continued to have impacts on FX inflows.

On average, currency analysts have projected the exchange rate to hit N500 in 2023, according to investment banking firms’ outlook for 2023. At the investors’ and exporters’ foreign currency market, the exchange rate worsened to N462 as demand outpaced the United States dollar volume supplied.

The same development was seen in the parallel market where the US dollar is freely exchanged for local currency. The exchange rate depreciated by 0.13% to N749 from N748. Analysts believe that the new naira note will support the normalization of demand in the black market from February 2023