Thursday, March 05, 2015 6.03PM/ Research
A review of today’s activities with respect to events at the foreign exchange market confirmed the following key developments:
• Today, the naira exchanged for N226/$1 to record +0.44% gain against yesterday’s price of N227/USD1.
• Speculative demand seems to have been curtailed with the CBN’s policy to sell only for legitimate/genuine users.
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 and other currencies over the months.
Today, the naira traded at N226 to a dollar. The value of the naira has depreciated significantly in the face of several measures by the CBN to stem the worsening value of the naira against major currencies in the world. Following the initial devaluation of the naira by 8% coupled with the CBN’s technical devaluation, new official Naira/USD exchange rate is now N197/$1 as at today.
The value of the naira has since the initial CBN devaluation traded between N173 and N230 to a USD1. The graph above shows in pictorial form the volatility of the naira against the dollar in the black market for the last 3weeks as it compares with the official rate, which has moved up from N168/$1 to N197/$1.
Oil price has also witnessed heavy decline since the last quarter of 2014. Today, the commodity recorded a gain of +0.58%, when compared to the previous day’s price of $60.49, to close at $60.84 on March 5th, 2015. The initial huge decline in oil price caused the Federal Government of Nigeria to review downwards its benchmark oil price for 2015 budget.
Today’s Brent crude price is still below the $65 benchmark oil price for the yet-to-be-passed 2015 budget, though the budget is now receiving attention from the Senate and might be benchmarked at $52 per barrel. You would recall that the Federal government of Nigeria 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 USD60.84/bbl while the other variant of crude (WTI) traded at $51.33 per barrel.
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