The naira depreciated on Friday at the parallel segment of the foreign exchange market against the United States dollar. It sold at N450 to $1, compared to N447 against the dollar, which was recorded on Thursday as some importers rushed to meet their foreign exchange payment obligations before the close of the week.
In addition, it should be noted that just recently, Nigeria’s central bank had paused the selling of U.S dollars to foreign investors and manufacturers seeking to retrieve their funds at the height of the oil crisis. This was done in a bid to protect the value of the naira, according to reports credited to Bloomberg news.
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“Remedial policy action was taken by the central bank and increased government borrowing will help contain liquidity pressures,” said Mahmoud Harb, a director at Fitch Ratings.
Meanwhile, according to the latest data obtained from the Central Bank of Nigeria (CBN), Nigeria’s foreign exchange reserves now stand at $36.57 billion, having increased sharply from $33.42 billion as of April 29, 2020. This shows a gain of $3.15 billion dollars in 36 days.
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The macro fundamentals surrounding Nigeria’s major export, including the recent surge in crude oil prices to about $41, seem to have helped Nigeria’s foreign reserve to rise at such a steady pace.
However, according to data recently obtained from Bloomberg news, twelve-month naira forwards traded at N454.50 per dollar at 11.43 a.m. on Wednesday, down from a high N522.56 to the dollar on April 20. This shows that currency traders are bullish on the naira at the mid-term macro level.
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