📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Nigeria's naira hits record low on official market after FX auction

Published 04/03/2023, 07:58 AM
Updated 04/03/2023, 11:39 AM
© Reuters. FILE PHOTO: A person holds a new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public through the banks in Abuja, Nigeria, December 15, 2022. REUTERS/Afolabi Sotunde

By Chijioke Ohuocha

ABUJA (Reuters) - Nigeria's naira dropped to a record low of 465 per dollar on the official market on Monday, Refinitiv data showed, as traders await the outcome of Friday's central bank foreign exchange auction.

The naira, which trades within a range on the official market, has fallen to successive lows due to dollar scarcity, coupled with central bank's adjustments to manage a backlog demand for foreign exchange.

It later recovered to trade at 461 to the dollar.

The central bank on Friday held a bi-weekly retail auction for people or businesses who need dollars to settle offshore trade-related obligations. The result of the sale are expected this Friday.

The naira weakened to 750 against the dollar on the black market as traders expect unsuccessful bidders at Friday's auction to channel their demand to informal sources.

"In this quarter, the (central bank) may be willing to raise levels at which they want to intervene on the market," one trader said, referring to the rate hike.

Nigeria's central bank is battling to manage liquidity on the interbank market while at the same time intervene on the foreign exchange market to prop up the currency.

© Reuters. FILE PHOTO: A person holds a new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public through the banks in Abuja, Nigeria, December 15, 2022. REUTERS/Afolabi Sotunde

It has been adjusting rates to manage demand against its level of foreign reserves.

Nigeria's president-elect Bola Tinubu and his administration - due to be sworn in in May - will be faced with soaring inflation and an unstable currency which has hampered Africa's biggest economy as it tries to recover from the COVID-19 pandemic.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.