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Naira drops to N460/$1 in parallel market, puts pressure on official exchange rate

The consistent slide of the naira in the parallel market is a pointer to the fact that CBN may further devalue the naira.

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COVID-19 could save naira from depreciating further, Many odds against the naira, Naira forwards and parallel market crash puts pressure on official exchange rate, Naira appreciates to N386.94 to $1 at investor and exporters window. , Naira set for recovery as ABCON issues guideline to members for forex sales resumption, Naira falls against the Euro, British pound sterling but gains against the U.S dollar, Naira falls at black market, dollar liquidity remains relatively low  , Forex, Naira drops further at the black market despite appreciating at I&E window 

Naira’s persistent slide in the parallel market is a pointer that the Central Bank of Nigeria (CBN) may further devalue the naira anytime soon as it did in March.

A dollar was sold for N460 at the parallel market on Tuesday, which is over 15% spread when compared to the interbank rate of N387 to a dollar on Monday.

Nairametrics had reported that the 12-month naira forwards was trading at N509 per dollar by 4.30pm on Monday, which means that the investors see the currency plunging to that level in a year.

Following the crash in oil prices, the CBN devalued the official rate from N307 to N360 to a dollar, and then the investors and exporters window from N366 to N380 to a dollar.

(READ MORE: Why the naira is falling)

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According to Bloomberg, to see an improved convergence in the rates, the CBN would need to restart its intervention sales in the foreign exchange market.

The naira is falling, Naira forwards and parallel market crash puts pressure on official exchange rate

The foreign exchange crisis is caused by low dollar inflow as a result of low prices of crude oil, which is the country’s main foreign exchange earner (about 90%), capital flight by foreign investors and very low foreign remittances as a result of global lockdowns due to the coronavirus pandemic.

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READ MORE: Gold hits 8-year high, strengthened by global recession sentiments

This is compounded by the suspension of sales of foreign exchange to Bureau de Change operators by the CBN.

The investor and exporters window is also badly affected by the liquidity crisis in the foreign exchange market, as the CBN suspended its periodic intervention since last month.

The demand for dollars by importers, foreign investors in the debt market who want to repatriate their funds, and even forex speculators will continue to put pressure on the naira and the country’s external reserve, as the declining export earnings are grossly inadequate.

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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]

2 Comments

2 Comments

  1. salawu sarmin

    April 28, 2020 at 8:18 pm

    hey am interested to know more about trade in Nigeria and forex trading

  2. Michael George Chekwube

    April 28, 2020 at 8:49 pm

    That is why are leaders loot money in dollars

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Coronavirus

COVID-19 Update in Nigeria

On the 29th of October 2020, 150 new confirmed cases and 2 deaths were recorded in Nigeria

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 62,521 confirmed cases.

On the 29th of October 2020, 150 new confirmed cases and 2 deaths were recorded in Nigeria, having carried out a total daily test of 3,008 samples across the country.

To date, 62,521 cases have been confirmed, 58,249 cases have been discharged and 1,141 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 620,758 tests have been carried out as of October 29th, 2020 compared to 617,750 tests a day earlier.

COVID-19 Case Updates- 29th October 2020,

  • Total Number of Cases – 62,571
  • Total Number Discharged – 58,249
  • Total Deaths – 1,1141
  • Total Tests Carried out – 620,758

According to the NCDC, the 150 new cases are reported from 9 states- Lagos (89), Rivers (19), Ogun (11), Bayelsa (9), Kaduna (8), Plateau (8), Taraba (3), Osun (2), Delta (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 21,106, followed by Abuja (6,028), Plateau (3,630), Oyo (3,433), Rivers (2,809), Edo (2,657), Kaduna (2,641), Ogun (2,027), Delta (1,814), Kano (1,746), Ondo (1,666), Enugu (1,314),  Kwara (1,069), Ebonyi (1,049), Katsina (952), Osun (925), Abia (898), Gombe (883).  Borno (745), and Bauchi (711).

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Imo State has recorded 616 cases, Benue (491), Nasarawa (482), Bayelsa (412),  Ekiti (332), Jigawa (325), Akwa Ibom (295), Anambra (277), Niger (274), Adamawa (257), Sokoto (165), Taraba (146), Kebbi (93), Cross River (87), Yobe (82), Zamfara (79), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

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The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

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Energy

Nigeria now generates 13,000mw of power – Minister of Power

Nigeria’s installed grid power generation capacity has increased from 8,000mw to 13,000mw under President Muhammadu Buhari.

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FG set to create at least 5 million jobs for youths in the power sector – Minister of Power , Consortium of Western investors to inject upwards of $5 billion in Nigeria's renewable energy sector, Power: Nigeria's deal with Siemens - the birth of a new era?

Minister of Power, Engineer Sale Mamman, disclosed that Nigeria’s installed grid power generation capacity has increased from 8,000mw to 13,000mw under the leadership of President Muhammadu Buhari.

This was stated by the Minister during the 2021 budget defence, before the House of Representatives Committee on Power in Abuja, as reported on the Twitter handle of  the Office of the Minister of Power today.

READ: N2trillion Mambila project: FG starts disbursement of compensation funds

READ: DisCos seek CBN funding for massive roll-out of meters to consumers

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READ: FG targets $150 billion revenue from Zero-oil plan 

However, members of the committee raised concerns about power supply to their various constituencies, urging the minister to ensure adequate supply.

The Minister explained that the distribution system had the capacity to evacuate 5,500mw of power, which is a significant improvement from 4,500mw in 2015, and that better performance should be expected in the near term.

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READ: FG to spend N447.6 billion on Police in 2021

READ: FG set to provide interest-free loans and agricultural inputs to farmers

Engr. Aliyu Magaji (APC-Jigawa), the Chairman of the committee, asked the Minister to mete out stiffer sanctions to the Distribution Companies (DisCos), to make them to sit up and provide the desired services to Nigerian people.

Magaji said that if the minister ensured the sanction of the DisCos, he would become the darling of lawmakers and the entire Nigerians.

READ: FG to inject over N198 billion on capital projects in power sector in 2021

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What they are saying

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On the performance of the Ministry since 2015, Engineer Mamman said:

During the period between 2015 to date, the sector has recorded successes and has faced challenges. In order to deliver this administration’s promise of providing stable and affordable power to Nigerians, a way forward was defined and supported by Mr. President’s political will.

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ENDSARS

Desmond Elliot apologises for addressing the youths as “Children”

Elliot apologised and allegedly broke down in tears on Live TV for addressing #EndSARS protesters as children.

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Desmond Elliot, a member of the Lagos State House of Assembly, apologised and allegedly broke down in tears on live TV for addressing #EndSARS protesters as “Children.”

The lawmaker disclosed this in a statement he issued via his Twitter handle and on a live TV interview on Thursday.

Elliot explained that he was carried away by his emotions, which was the reason he used such a word to describe the protesters on the floor of the house.

He tweeted, “I have read your honest feedback& suggestions& [sic] I sincerely apologize for addressing the youths as ‘Children.’

“I did not mean to be insensitive with this, it was borne out of the magnitude of destruction&looting [sic] of businesses I witnessed when I went on a tour of my constituency.

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“I saw women crying and my constituent members distraught as a result of the damages inflicted on their source of livelihood. I was moved by this while giving my submission on the floor of the House.

“I allowed my emotions get the better of me and for this I apologize to everyone my earlier statements may have hurt.”

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What you should know

The lawmaker, who is also a film maker, in his submission at the House on Thursday, allegedly pushed for the passing of a social media regulation bill.

His controversial statement received lots of criticisms, as many Nigerian youths attacked him for referring to youths as “children” and for also pushing for the regulation of social media.

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