Monday, February 02, 2015, 6.15 PM / Research
The Nigerian naira exchanged today at N210.00 to a dollar to sustain a 4-day straight trade around N210.00, despite efforts by the Central Bank of Nigeria to stem the widening gap between the official and the parallel market rate. The high naira/dollar exchange rate is compounded by forex scarcity among the BDCs.
The wide margin between the official rate of N168/$1 and black market rate of N210/$1 makes it easier for BDCs to exploit by buying very cheap from CBN and selling with a wide margin.
The Nigerian currency also exchanged at N310 to 1GBP.
Our daily 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, a point above the N210/$1 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 $43.88 as at Friday, January 30th, 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. On Friday, the price of Brent Crude oil (Nigeria’s crude oil type) was $49.52 while the other variant of crude (WTI) traded at $48.24 per barrel on the same day.
# Proposed oil price benchmark for Nigeria's 2015 budget
* Difference between Nigeria's benchmark and oil prices
Brent Price is as at 15:00:58 GMT- Jan -30, 2015
**Crude Oil (WTI) figure was as at end of day Jan -30, 2015
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