Nigeria faced economic uncertainty as the naira hit a record low against the dollar on Thursday. LSEG data showed a drop from 830 to 1,105 naira to the dollar before recovering slightly to 800 by day’s end.
The official exchange rate’s convergence with the parallel market rate over the past two weeks has heightened anxieties within financial circles. On the parallel market, the naira quoted at 1,135 against the dollar, deviating from the 750 to 990 naira range reported on the official market.
Despite fluctuations, a spokesperson from the central bank chose not to comment on the naira’s decline or the institution’s plans for currency stabilization, leaving markets and investors uncertain.
Traders attribute this anomalous rate to a liquidity squeeze fueled by increased demand in the official market. Olayemi Cardoso, the central bank governor, has yet to communicate the desired trading band for the naira or provide a timeline for injecting liquidity into the market, fostering a sense of uncertainty among investors.
The absence of central bank intervention on the official market since October has expedited the naira’s slide, according to traders. Last week’s recovery from a record low of 1,300 on the parallel market came after the central bank sold dollars to 14 lenders to clear outstanding currency forwards. However, some lenders are still awaiting settlement.
In the midst of economic uncertainty, the government has announced an anticipated $10 billion in foreign currency inflows, promising potential relief to market liquidity. However, the arrival date for these funds remains uncertain, adding another layer of complexity to Nigeria’s currency challenges. As the nation grapples with stabilizing its currency, the global economic landscape poses challenges, leaving stakeholders and observers watchful of the unfolding situation.
Photo (Bloomberg/Contributor Source: Getty Images )
By: Montel Kamau
Serrari Financial Analyst
16th November, 2023
Article and News Disclaimer
The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.
The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.
The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.
By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.
www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.
Serrari Group 2023
