Exchange Rate Treads Softly as CBN Acknowledges New Devaluation


Tuesday, February 24th, 2015 5.26PM / Research


A review of today’s activities with respect to events at the foreign exchange market confirmed the following key developments:

   •         The Central Bank of Nigeria officially acknowledged the “technical devaluation” it carried out when it closed the rDAS window. This was announced by the apex bank by changing the Naira/USD official exchange rate on its website from N168/$1 to N199/$1. See image below.

   •         The naira exchanged at N222/$1 to slightly worsen the position on  Monday by 1.0%, when it traded for N219.80/$1

   •         Demand for forex continues to be low as customers show unwillingness to buy at the high prevailing high rate.

   •         The naira traded against the Pounds sterling at N328/£1 while the Euros traded at N250/€1


Today, the naira exchanged for N222 to a dollar in the parallel market as forex scarcity wanes due largely to low demand while the pounds sterling traded around N328 to one pound, to retain the position as at Monday.


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 N222 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% and the falling value of the naira, the CBN has technically devalued the naira again by closing the rDAS window and restricting dollar sales to only genuine and legitimate demands. The apex bank today, recognized a new official exchange rate of N199/$1 on its website.

Source: Fieldwork

The value of the naira has since the CBN devaluation traded between N173 and to a N222/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 N199/$1.


Oil price has also witnessed heavy decline since the last quarter of 2014. The commodity price recorded a gain of +1.71%, when compared to Monday price of $59.11, to trade at $60.12 as at 10.42ET on February 24th, 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. 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 USD60.12/bbl while the other variant of crude (WTI) traded at $50.03 per barrel.


To View Commodity Prices Click Here.. 

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