The value of the naira weakened further Wednesday at the parallel market but remained stable at N381 at the official and Nigeria Autonomous Foreign Exchange (NAFEX) market.
Analysts said there may be another devaluation soon, with the local currency expected to weaken further on high demand for foreign exchange.
From N475 to the dollar, which had been selling on the parallel market for over a week, the value of the naira saw a sudden crash to N480 yesterday despite closing at N385 to the dollar at the Importers and Exporters window.
One of the analysts was quoted as saying there were backlog of dollar requests by foreign portfolio investors that are yet to be met at the official market and that as international flights will be resuming soon, the pressure on the currency will increase in the coming weeks.
Also, local investors have started moving their investments from naira instruments to dollar denominated instruments, due to the low yield environment and rising inflation in the country.
Inflation figures had further risen to 12.82 per cent as at July 2020, according to latest data by the National Bureau of Statistics (NBS).
Senior research analyst at FXTM, Lukman Otunuga, in an emailed note, said despite a weakening of the dollar across board, the naira had not been able to ‘catch a break.’
The local currency, he said, is trading around N475 per Dollar on the black-market and could weaken further as foreign-currency shortages strain Africa’s largest economy.
He noted that with export earnings diminishing due to depressed oil prices, government revenues have taken a massive hit and the negative impacts may trickle through the economy.
Meanwhile, the 30-day moving average of the external reserves had dropped by 1.4 per cent within a month from $36.124 billion as at July 14, 2020 to $35.619 billion as at August 14, 2020 as the CBN continues its intervention at the foreign exchange market, though it is yet to commence its three times a week dollar sales to Bureaux de Change in the country.
