Naira falls to record low in biggest drop this year

0
860
Cash
  • Domestic equities market index sheds 0.12% amid sustained profit-taking

BY BAMIDELE FAMOOFO

Nigeria’s currency on Thursday depreciated by 1.02 percent (N4.83/$1) at the Investors and Exporters forex window, Nigeria’s official foreign exchange market.

After trading on Thursday the dollar was quoted at N469.50 compared to N464.67 quoted since May 31, 2023, I&E window, data from the FMDQ indicated.

The local currency further weakened against the dollar on Thursday, losing 0.39 percent (N3) at the parallel market, also known as black market.

During the trading session on Thursday the dollar was quoted at the rate of N763 as against N760 on Wednesday.

The naira depreciation followed strong demand for dollars by individuals for travel allowances and school fees.

The Naira has since last week steadied at N464.67 per dollar at the Investors and Exporters forex window despite a decline in the market liquidity on Wednesday.

Most currency traders who participated at the foreign exchange auction on Wednesday maintained bids between N460/$1, lower and N467/$1, higher bid.

The daily foreign exchange market liquidity declined by 24.57 percent to $140.31 million on Wednesday from $186.02 million recorded on Tuesday, data from the FMDQ indicated.

President Bola Tinubu had in his inaugural speech on May 29, 2023 signaled plans for a single exchange rate. He said monetary policy needs thorough house cleaning and that the Central Bank of Nigeria must work towards a unified exchange rate.

This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.

“The naira volatility has underpinned our slow economic growth and fuelled an inefficient informal market,” said Aminu Gwadabe, national president, Association of Bureau De Change Operators of Nigeria.

Multiple exchange rates, he said, are ground and encourage illegal economic behaviour for rent seeking, currency substitution and hoarding, adding that the lack of unified exchange rates has acute shortages in the retail end sector of the market where the spikes and volatility is most pervasive.

“We as licensed retail exchange Business believe the unification will lead to a true market price discovery and enhance liquidity in our sub sector.

“To this end we advise the new president to embrace securitization of diaspora remittances by leveraging on the BDCs sub-sector as the most potent and effective transmission mechanisms of monetary policies in the retail end sector of the market,” Gwadabe said.

Meanwhile, the local bourse All Share Index moderated by 0.12 percent on Thursday to close at 55,956.59 points amid sustained bearish activity, especially on bellwethers.

Hence, the year-to-date gain of the NGX ASI mellowed to 9.18 percent despite the exchange recording 41 gainers as against 13 losers at the close of the trading session.

Notably, large-cap stocks such as Nigerian Breweries Plc and Dangote Cement Plc experienced a decline in share prices as investors booked profits.

Hence, their respective prices moderated by 1.80 percent and 1.38 percent, respectively.

Of the five indices tracked, three closed in green except for the NGX Consumer Goods and NGX Industrial indexes, which fell by 0.13 percent and 0.71 percent, respectively.

The NGX Banking, NGX Insurance, and NGX Oil/Gas indices rose by 0.99 percent, 3.97 percent, and 1.00 percent, respectively.

However, market activity improved, with total deals, volume, and value increasing by 7.98 percent, 33.74 percent, and 17.52 percent, respectively, to 6,061 trades, 531.78 million units, and N7.68 billion. In terms of volume, UBA emerged as the most actively traded stock, with 177.48 million shares worth N1.72 billion changing hands in 506 deals.