The Nigerian naira has once again depreciated in the foreign exchange market, trading at N1,590 per US dollar on Wednesday. According to market checks, this marks the second consecutive day that the naira has lost value. The depreciation is largely attributed to the ongoing shortage of foreign exchange (FX) in the official market, which has influenced the pricing of the US dollar in the black market......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
Just a short while ago, the naira had strengthened to N1,550 per dollar, narrowing the gap between the official exchange rate and the parallel market rate to just N50. At that time, the official exchange rate stood at N1,500 per dollar. However, due to persistent FX scarcity, both the official and black market rates have been adjusted upwards, making foreign exchange more expensive for individuals and businesses.
On Tuesday, the naira lost N5.45 in the official market, closing at N1,506.40 per dollar. In the parallel market, the local currency weakened even further, losing N15 to settle at N1,575 per dollar. This widening gap between the two markets pushed the disparity from 3.93% to 4.55%.
In response to the volatility, the Central Bank of Nigeria (CBN) intervened in the foreign exchange market on Monday, injecting $16.45 million. The intervention was carried out at an exchange rate range of N1,497.00 to N1,500.00 per dollar. However, this move has not significantly eased the liquidity shortage, leading to the continued pressure on the naira.
Oil Prices Surge Amid Supply Concerns
Global crude oil prices have reached a two-week high due to growing concerns about possible supply disruptions from Russia and Iran. These disruptions are linked to economic sanctions and escalating geopolitical tensions in the Middle East. Despite worries that increased trade tariffs could trigger inflation and slow down global economic growth, oil prices have remained strong.
On Wednesday, Brent crude, the global benchmark for oil prices, rose by $1.13 (1.5%) to close at $77.00 per barrel. Meanwhile, the U.S. benchmark, West Texas Intermediate (WTI) crude, climbed by $1.00 (1.4%) to settle at $73.32 per barrel.
At the same time, gold prices experienced a slight decline as investors took profits after gold reached a record high. Despite the dip, investor sentiment towards gold remains positive due to ongoing fears of a global trade war following U.S. President Donald Trump’s announcement of new tariffs. Spot gold declined by 0.1% to $2,904.87 per ounce after reaching an intraday high of $2,942.70 per ounce earlier in the trading session.