BREAKING: Pressure Hits Naira Hard Despite Increase In Forex Reserves

Naira has been hit hard by pressure despite increase in forex reserves.

The Publisher Nigeria gathered that Nigerian currency naira remained under pressure across official and parallel markets despite continuing increase in Nigeria’s foreign exchange (forex) reserves.

This online news platform understands that the Nigerian naira depreciated by 0.2 per cent at the official Investors and Exporters (I & E) Window and fell further by 0.5 per cent at the parallel market. Nigeria’s forex reserves, meanwhile, rose for the second consecutive week to close at $39.87 billion, an increase of $25.56 billion.

The Nigerian official currency naira depreciated N416.67 per dollar at the I & E Window as turnover on the official window declined by more than 20 per cent. At the parallel market better known as the black market, the 1 dollar to naira exchange rate today declined to N577.00 per dollar, as large unmet demand continued to sustain wide gap between the official and parallel rates.

Newsone understands that most analysts said they expected the nation’s currency to remain under pressure despite the steep rise in crude oil price.

Analysts at Cowry Asset Management said they expected “sustained pressure at the I & E FX Window as the markets react to strain in forex supply despite higher crude oil prices at the international market as production output remains low”.

Cordros Capital noted that while the Central Bank of Nigeria (CBN) has enough supply to support the forex market over the short term, the naira may depreciate further in the medium to long-term as the market adjusts to market realities.

Newsone Nigeria understands that analysts at Cordros Capital outlined that the major factors responsible for the low performance of the oil sector included the difficulties in restarting the oil wells for operation after the COVID-19 induced shutdown and infrastructure decay.