Naira Depreciates To N827.83/$1 At Official Market

The naira again declined against the US dollar at the official market on Thursday, exchanging for N827.83 to one U.S dollar after a slight appreciation on Wednesday which saw the local currency exchanging at N818.99/$1. This is still a slight gain when compared to the N850.22 it recorded on Tuesday. However, the naira closed flat at the parallel forex market where forex is sold unofficially, the exchange rate closed at N1140/$1 as against the same N1140/$1 it quoted on Wednesday, representing 0.00 per cent, while peer-to-peer traders quoted around N1127.01/$1.  The intraday high recorded was N1100/$1, while the intraday low was N751.00/$1, representing a wide spread of N348.78/$1. Similarly, the naira also fell to the Euro, exchanging at N1,175/€1 at the parallel market, while it goes for N898.44/€1 at the official market. Also the pound sterling goes for N1,370 and N1029.7441 at the parallel and official market respectively. According to data obtained from the official NAFEM window, forex turnover at the close of the trading on Wednesday was $173.51 million, representing a 20.87 per cent increase compared to the previous day.  The local currency struggle at the foreign exchange market is coming on the heels of rising inflation in the country which saw the inflation rate jump to 27.33 per cent in October 2023 as prices of foodstuff continued to increase in the aftermath of the removal of fuel subsidy by the President Bola Tinubu administration. This was according to the October 2023 Consumer Price Index (CPI) and Inflation Report released by the National Bureau of Statistics (NBS) on Wednesday. The CPI, which measures the changes in the prices of goods and services, rose from 26.72 per cent to 27.33 per cent showing an increase of 0.61 per cent points. “In October 2023, the headline inflation rate increased to 27.33 per cent relative to the September 2023 headline inflation rate which was 26.72 per cent,” the report partly read. “Looking at the movement, the October 2023 headline inflation rate showed an increase of 0.61 per cent points when compared to the September 2023 headline inflation rate. “Furthermore, on a year-on-year basis, the headline inflation rate was 6.24 per cent points higher compared to the rate recorded in October 2022, which was (21.09 per cent). “This shows that the headline inflation rate (year-on-year basis) increased in October 2023 when compared to the same month in the preceding year (October 2022).”

Naira Freefall: FG To Receive $10bn Forex Inflow – Finance Minister

The fortunes of the naira may soon be reversed with the Finance Minister, Wale Edun assuring that about $10 billion naira is expected to flow into the economy in a matter of week Edun made this known during a panel session at the ongoing Nigeria Economic Summit Group (NESG) question and answer session concerning stabilizing the foreign exchange market and enshrining liquidity in the market. Since the unification of the foreign exchange market in June, the naira’s value has slumped by over 100 per cent on the parallel market. The current CBN management has introduced a slew of measures to provide liquidity but the chasm between the rate on the I&E window and parallel market continues to widen. The minister said, “in addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10 billion worth of foreign exchange in the relatively near future in weeks rather months.” The Minister further said President Tinubu has signed two executive orders geared towards ensuring liquidity in the forex market. He said, “Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time.” “The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply” “Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”

Oil marketers mull N750/litre fuel price amid forex crisis

*Stop importation of products In the wake of a deepening forex crisis, oil marketers have signaled a potential surge in the cost of Premium Motor Spirit (PMS), commonly known as petrol, projecting prices between N680/litre and N720/litre in the near future. The escalation hinges on the prevailing exchange rate, which oscillates between N910 and N950 for a US dollar in the parallel market. Market insiders have also disclosed that the scarcity of foreign exchange has prompted prospective PMS importers to shelve their plans temporarily. This revelation emerges shortly after the local currency surpassed the N900/dollar benchmark, with the naira trading at over 945/dollar in the parallel market on Friday. The forex dilemma has significantly impacted the availability of foreign exchange through the Central Bank of Nigeria’s (CBN) Importers and Exporters official window, which offers a more favorable exchange rate of approximately $740/litre. However, the window remains insufficiently liquid to accommodate the $25 million to $30 million required for PMS imports by dealers. As a result, the shortage has forced dealers who were initially eager to import petrol to suspend their plans. Leaders of notable organizations such as the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria have underscored the need for Federal Government intervention to address the mounting crisis. Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, highlighted that petrol prices now closely follow forex fluctuations, thus foreshadowing an impending price hike. Ukadike pointed out that the demand and supply of forex significantly impact petrol costs, and this situation extends beyond petroleum products, affecting other import-dependent industries as well. He indicated that with the dollar’s upward trajectory to N910 to N940, and potentially nearing N1,000, consumers should anticipate a PMS prices of about N750/litre. Ukadike emphasized that since many importers, including oil marketers, rely on the parallel market for dollar sourcing, the price increase is a direct result of dollar strength. While the Nigerian National Petroleum Company Limited remains the primary petrol importer in the country, independent importer Emadeb recently entered the market. However, Ukadike noted that the depreciation of the naira creates challenges for importers when trying to recover funds from sales conducted in the local currency. He projected that once NNPC adjusts its petrol prices, other marketers are likely to follow suit. The nation’s growing forex predicament continues to cast uncertainty on fuel prices and availability.