Fresh Crude Oil Prices Plunge Crashes Naira At I&E FX Window
ISMAIL MUSA
In the just concluded week, Naira depreciated against the Dollar at the Investors and Exporters FX Window (I&E FXW) by 0.10 to close at N386.33/USD as the rally in crude oil prices slowed at the international market.
However, Naira appreciated against the USD at the Bureau De Change and the parallel (“black”) markets by 2.22% and 2.17% respectively to close at N440.00/USD and N450.00/USD respectively.
However, NGN/USD closed flat at the Interbank Foreign Exchange market, at N358.51/USD, amid injection of weekly injections of USD210 million by CBN into the foreign exchange market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisible.
Elsewhere, the Naira/USD exchange rate rose (i.e Naira depreciated) for most of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months rates gained 0.12%, 0.12%, 0.13%, 0.15%, and 0.20% respectively to close at N388.14/USD, N389.96/USD, N391.82/USD, N397.30/USD, and N415.84/USD respectively. However, the spot rate was unchanged at N361.00/USD.
Meanwhile, With the sharp decline in crude oil prices, especially in the month of April 2020 – bonny Light average price was USD20.29/b –, coupled with the significant contraction in manufacturing and non-oil manufacturing sectors (their respective May 2019 PMIs read to 42.4 and 25.3 index points as against 51.1 and 49.2 index points in March 2020) amid total lockdown order, we expect negative growth in Nigeria’s Q2 2020 real GDP.
However, experts have noted that the Nigerian economy should recover quickly from the anticipated recession, given the proactive actions by the federal government and the Central Bank of Nigeria (CBN)
In the new week, It has also been projected that the Naira will record further decline against the USD , especially at the I&E FX Window following the recent decline in crude oil prices
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