The Nigerian naira plummeted by about 7% in the foreign exchange (FX) market as US dollar shortage exerted pressures on demand and supply.
FX spot data from the FMDQ platform revealed that the Naira depreciated by 6.83%, closing at ₦1,658.97 per US dollar at the official market.
Weak FX liquidity in the currency market has kept exchange rates on the high side several months after official devaluation.
Nigeria is facing acute US dollar shortage due to excessive focus on oil export as major driver of foreign currency receipts.
Due to various oil-backed loans, government FX revenue has reduced while the country struggle to meet the Organisation of the Petroleum Exporting Countries (OPEC) daily quota.
Analysts hinted that while the naira is falling, the external reserves balance has continue to making an uptrend, reaching $38.67 billion.
But the larger part of the gross foreign reserves is noted to have been pledged in series of oil-backed loan deal entered into by the Nigerian National Petroleum Corporation Limited.
In the parallel market, the Naira closed at ₦1,680 to the US dollar on Tuesday due to deficiency of strong foreign currency stock in the supply side.
Oil prices declined more than 4% in the global commodity market following reports that Israel assured the U.S. it has no plans to target Iran’s oil facilities.
Israeli official statement alleviated concerns about a potential disruption in Middle Eastern oil supply. Brent prices decreased by 4.42% to $74.04, and WTI prices saw a 4.67% drop to $70.38.
Meanwhile, gold prices rose, supported by falling Treasury yields, as investors awaited further data for insights into the Federal Reserve’s monetary policy. Gold reached $2,680.10 per ounce.
