The Naira's Value Declined By 0.52% Due To The Ongoing Strong Demand For Dollars


Foreign exchange (FX) pressure persisted on Wednesday, with the naira experiencing a decline against the dollar in various market segments. The naira's value decreased by 0.52 percent, with the dollar trading at N965 per dollar at the close of business on Tuesday and maintaining the same rate when Wednesday began, compared to the N760 rate observed on Monday in the parallel market.

In the current scenario, the naira has devalued by 30.76 percent (equivalent to N227) against the dollar year-to-date, starting from N738/$1 at the beginning of the year, especially in the black market. This depreciation is primarily attributed to a robust demand for dollars by individuals traveling for business, education, medical reasons, or tourism.

At the Investors’ and Exporters’ (I&E) forex window, Nigeria's official FX market, the naira witnessed a 0.34 percent decline, with the dollar quoted at N776.60 on Tuesday compared to N773.98/$1 on Monday, based on data from FMDQ. Year-to-date, the local currency has depreciated by 68.46 percent (equivalent to N315.60), trading at N776.60/$1 from its initial rate of N461/$1 at the beginning of the year. In the foreign exchange market, willing buyers and sellers maintained bids at N799.90/$1 (high) and N720.00/$1 (low), while the daily foreign exchange market turnover closed at $71.01 million on Tuesday.

Shifting focus to the money market, the Nigerian treasury bills secondary market ended Tuesday on a slightly negative note. The average yield across the curve increased by 1 basis point to 7.17 percent from the previous day's 7.16 percent, as reported by FSDH Research. Notably, the average yields for short-term and medium-term maturities remained unchanged at 3.05 percent and 6.16 percent, respectively. However, there was a 9 basis point expansion in the average yield for long-term maturities. The treasury bill with a maturity date of July 11, 2024, experienced selling pressure during this period.

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