Tuesday, February 03, 2015, 6.40 PM / Research
The naira today sustained its exchanged rate value of N210.00 to a dollar to continue 6-day straight trade around N210.00. This has necessitated a special intervention by the Central Bank of Nigeria to improve the liquidity in the BDC segment of the Foreign Exchange Market.
According to the CBN circular released today, the Central Bank of Nigeria will be intervening in the market by selling USD 30,000.00 to interested BDCs on Friday 06, February 2015. This is in addition to the weekly sales to the operators.
The wide margin between the official rate of N168/$1 and black market rate of N210/$1 is compounded by the relative scarcity of dollar among the BDCs. In a similar fashion, the Nigerian currency also exchanged for N310 to 1GBP.
Our daily exchange rate monitor of the performance of the naira against the dollar following the devaluation of the Nigerian currency in November 2014 continues to highlight how the naira has fared against the dollar over the last two months.
Today, the naira traded at N210 to a dollar, same value it traded on Monday. The value of the naira has depreciated significantly because of the failing global oil prices and some unfavorable practices in the forex market.
The value of the naira has since the CBN’s devaluation traded between N173 and N211 to a dollar in the black market. It however traded at N210/$1 today. The graph below shows in pictorial form the volatility of the naira against the dollar in the black market for the last 3weeks while the CBN official rate has remained fairly stable at the official rate within the same time period.
Oil price has also witnessed heavy decline since the last quarter of 2014. The commodity has dropped significantly from above $100 to $48.19 as at Tuesday, February 3rd, 2015. The downward slide in oil price caused the Federal Government of Nigeria to review downwards its benchmark oil price for 2015 budget.
The benchmark oil price for the yet-to-be-passed 2015 budget is $65. You would recall that the Federal government initially set the benchmark price for 2015 budget at $78 before the first downward review to $73 of which circumstances forced it to review further down to $65 per barrel. Today’s price of Brent Crude oil (Nigeria’s crude oil type) was $56.18 while the other variant of crude (WTI) traded at $49.57 per barrel on the previous day.
# Proposed oil price benchmark for Nigeria's 2015 budget
* Difference between Nigeria's benchmark and oil prices
Brent Price is as at 14:06:57 GMT- Feb -03, 2015
**Crude Oil (WTI) figure was as at end of day Feb -2, 2015
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