Friday, January 23, 2015, 5.55 PM / Research
As we continue to monitor the performance of the naira against the dollar following the devaluation of the Nigerian currency in November 2014, we highlight today how the naira fared against the dollar in the parallel market.
The value of the naira in the parallel market (black market) has witnessed huge deviation from its official rate since the Central Bank of Nigeria devalued the currency on the 25th November, 2014. Today, the naira declined further when it traded around N208 to a dollar while it has traded between N191 and N208 to a dollar in the last 2weeks. The jack in the exchange rate differential is further compounded by the new CBN directive to stop dollar sales to BDCs.
The value of the naira has since the CBN’s devaluation traded between N173 and N208 to a dollar in the black market. It however recorded a new low of N208/$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 a new low of $43.25 as at Thursday, January 22nd, 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 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. Yesterday’s price of Brent Crude oil (Nigeria’s crude oil type) was $49.21 while the other variant of crude (WTI) traded at $46.31 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 13:57:24 GMT- Jan -22, 2015
**Crude Oil (WTI) figure was as at end of day Jan -21, 2015
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