The Nigerian currency breached the N1,450 mark against the greenback on the black market amid evolving market dynamics in Nigeria’s fragile FX market.
Market fundamentals affirm that the naira lost its support at N1450, setting up a new wave of free decline, continuing its downward trend from March, when it was previously praised as the world’s best-performing local currency. Recent price action shows the naira within striking distance of N1500 against the haven currency.
On the black market, the naira fell to a month-low of 1,470 against the dollar on Friday amid high demand for the greenback. Market analysts have long maintained that without a corresponding policy move by the fiscal side, the local currency would be unable to hold its year-to-date gains.
The CBN made significant progress by clearing actual FX backlogs and amplifying rates to attract FPIs and keep the local money market more attractive; however, profit-taking and a slowdown in inflows obscured this success.
Standard Chartered’s top economist for Africa and the Middle East, Razia Khan, stated in an interview that about $1.3 billion of naira futures are set to mature at the end of this month, which could potentially depress the country’s FX market.
