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Business News

Naira forwards hit record high as local currency crashes to N420/dollar in the parallel market

As events in the oil market fallout, the US dollar hit a record high against the Naira in the non-deliverable forward’s markets on Tuesday, April 21, 2020.

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Naira’s true worth,Naira gains on the dollar for the first time since March, Naira forwards hit record high as it crashes to N420/dollar in the parallel market, Naira hits N500 to $1 at the forward market, Naira hits N509 to the dollar at forwards market, demand for the U.S dollar climbs up, Naira hits $387.35 to $1 at currency spot market , Naira sells at N456, Nigeria’s Foreign Reserves drop by over $3 billion in Q1 2020, Investors and Exporters (I&E) window, Naira gains against the dollar, CBN close in on currency speculators

As a fallout of events in the oil market yesterday, the US dollar hit a record high against the Naira in the non-deliverable forward’s markets on Tuesday, April 21, 2020. This was after the US crude futures crashed to negative, a day earlier.

According to Reuters, a one-year dollar/naira non-deliverable forwards stood at 498.5 points up from Monday’s close of 492.4 as shown by data from Refinitiv.

The Nigerian foreign exchange market is reacting to the negative trend and high volatility in the global oil market.

The continuous plunge in oil demand globally is a result of the lockdowns and restrictions caused by the coronavirus pandemic and concerns over global storage facilities which are rapidly getting filled up with tank owners rejecting storage offers.

(READ MORE: Bulls hit back to support U.S crude oil amid panic sell-offs in global equity markets)

This saw the US WTI crude in a historic event, selling below zero dollars as oil traders were willing to pay to get the crude oil off their hands ahead of the expiry of the contract for delivery in May. The Brent crude got to just about $22 per barrel and the Nigerian headline crude, Bonny light selling at $20.88 barrels per day.

With Nigeria relying on oil export for about 90% of its foreign exchange earnings, the further crash of crude oil prices puts further pressure on the external reserves and the foreign exchange market.

READ MORE: Investing in Cryptocurrencies during this economic shutdown; here’s your need to know

Meanwhile, with the pressure on the forex market continuing unabated, the naira has depreciated to N420 per dollar at the parallel market according to Aboki fx. This is against the N416 to a dollar that is sold on Friday, April 17, 2020.

This is further exacerbated by the suspension of dollar sales to the Bureau De Change operators

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. ADETOLA

    April 21, 2020 at 2:37 pm

    Nice article. What do you think would happen to naira in coming weeks if oil prices don’t pick up momentum?

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