Exchange rate Continues to Rise amid fears of more devaluation

Forex
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Friday, February 13, 2015 6.10PM / Research

 

A review of prices in the market today, following the activities at the foreign exchange market confirmed the following key developments:

         The exchange rate at the parallel market continues to worsen which is largely due to artificial scarcity.

         Wide Naira-dollar rates among BDCs as each operator set different price based on customers willingness to buy

         Hoarding of foreign currencies as rumours of more devaluation of the naira dominates the market

         A growing level of scarcity occasioned by deliberate hoarding by BDC operators that have them

 

Today, the naira exchanged for N211 (average price) to a dollar in the parallel market as forex scarcity deepens following rumours of more devaluation of the naira in weeks to come. The pounds differential also increased slightly to N315/1GBP in the black market today.

 

EXCHANGE RATE

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 months.

 

Today, the naira traded at N211 to a dollar. The value of the naira has depreciated significantly majorly because of the dwindling oil revenue from failing global oil prices. Some analysts are beginning to call for more devaluation following the initial devaluation of the naira by 8%. Fears of such devaluation are beginning to take a negative toll on the exchange rate.


Source: Fieldwork


The value of the naira has since the CBN’s devaluation traded between N173 and N211 to a dollar in the black market. The Nigerian naira traded at N211/USD1 today, same price it recorded on the 28th January, 2015. 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 of N168/$1 within the same time period.

 

 

OIL PRICE
Oil price has also witnessed heavy decline since the last quarter of 2014. The commodity is however beginning to gain some momentum as it traded for $61.21 on Friday, February 13th, 2015. The initial huge decline 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, the price of Brent Crude oil (Nigeria’s crude oil type) was $61.21 while the other variant of crude (WTI) traded at $51.21 per barrel the previous day.

 

To View Commodity Prices Click Here.. 

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