New Telegraph

Devaluation speculation mounts as naira weakens

Speculation mounted in financial circles yesterday that another devaluation of naira was afoot as the local currency extended its weakness on the Investors and Exporters’ (I&E) window. According to data obtained from FMDQ’s website, naira yesterday closed at N395.50 per dollar from an opening rate of N395.25/$1.

On Tuesday, naira closed at N395 per dollar compared with N394/$1 the previous day. According to Nairametrics, despite dollar supply rising significantly by 146.9 per cent, the Exchange rate during intraday trading on Tuesday, rose as high as N416.95/$1, the highest intraday trade tracked by the financial news website. Nairametrics also reported yesterday that the Central Bank of Nigeria (CBN) had revised its oneyear Non-Deliverable Forwards (NDF) for which it intends to settle foreign exchange futures contracts for the period ending February 2021 to N452.82 up from N440.86. NDF is an indicator of the direction of the exchange rate in the future and is often referenced against the spot rate of the exchange rate between the naira and the dollar. The financial news website reported foreign currency analysts as saying that the latest NDF contracts suggested that the closing rate of the exchange rate at the I&E window might be devalued this month. It reported the analysts as speculating that the CBN’s settling of NDF contracts due at the end of the month for N412.14 indicated that the apex bank could soon depreciate naira’s current official exchange rate of N379/$1, while the exchange rate at the I&E window could weaken to N415/$1.

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