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Naira Bows to further pressure on Strong dollar demand

A review of today’s activities with respect to events at the foreign exchange market confirmed the following key developments:

  ♦      Today, the naira exchanged for N226/$1 to dip further by -1.57% against yesterday’s price of N222.5/USD1, to further worsen the value of the naira.

 

  ♦      The US dollar continues to record strong demand

  ♦      The naira traded against the Pounds sterling at N302/£1

 

Today, the naira exchanged for N226 to a dollar in the parallel market while the pounds sterling traded around N302 to one pound to maintain same position as yesterday.

EXCHANGE RATE

Our daily exchange rate monitor of the performance of the naira against the dollar following the devaluation of the Nigerian currency in November 2014 continues to highlight how the naira has fared against the dollar and other currencies over the months.

Today, the naira traded at N226 to a dollar and has exchanged above N200 since January 22nd, 2015. The value of the naira has depreciated significantly in the face of several measures by the CBN to stem the worsening value of the naira against major currencies in the world. Following the initial devaluation of the naira by 8% coupled with the CBN’s technical devaluation, new official Naira/USD exchange rate is now N197/$1 as at today.

The value of the naira has since the initial CBN devaluation traded between N173 and N230 to a USD1 band. The graph above shows in pictorial form the volatility of the naira against the dollar in the black market for the last 3weeks as it compares with the official rate, which has moved up from N168/$1 to N197/$1.

OIL PRICE
Oil price has also witnessed heavy decline since the last quarter of 2014. Today, the commodity recorded a marginal gain of +0.07%, when compared to the previous day’s price of $57.00, to close at $57.04 on March 11th, 2015. The initial huge decline in oil price caused the Federal Government of Nigeria to review downwards its benchmark oil price for 2015 budget.

Today’s Brent crude price is still below the proposed $65 benchmark oil price for the yet-to-be-passed 2015 budget, though the budget is now receiving attention in the national assembly and might be benchmarked between $52 to $54 per barrel. You would recall that the Federal government of Nigeria initially set the benchmark price for 2015 budget at $78 before the first downward review to $73 of which circumstances forced it to review further down to $65 per barrel.



Today, the price of Brent Crude oil (Nigeria’s crude oil type) was USD57.04/bbl while the other variant of crude (WTI) traded at $47.83 per barrel.

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