The Nigerian local currency, the naira, weakened further as the exchange rate inched near N440 to a United States dollar at the investors’ and exporters’ foreign exchange window.

In the just concluded week, the Naira depreciated by N2.14 kobo to N439.17 on Friday from N437.03 at the official FX window for investors and exporters.

Data from the CBN website shows that Nigeria’s FX reserves decreased by $153.59 million last week to $38.10 billion.

The decline follows lower inflows from oil exports receipt as Angola overtakes Nigeria as the largest oil exporter in the West African bloc.

In its macroeconomic note, Cowry Asset Management stated that local currency move gradually to another record low of N440 over the need to hedge against naira depreciation following the recent interest rate hike by the CBN plus Nigeria’s low crude oil earnings.

In the parallel market, the exchange rate worsened as investment bankers maintained that the spot rates will worsen further due to election spending.

Already, the market has started seeing higher demand for the greenback, according to currencies traders in Lagos.

The exchange rate weakened to N740 at the parallel market from N735 in the previous week.

“As we draw closer to the election year and with the campaign activities by political parties taking full gear already, it is expected that the demand for the greenback will buoy further weakening of the legal tender”, Cowry Asset said.

At the investors’ and exporters’ FX window, market participants maintained bids between N435 and N450, according to trading data released by analysts.

Analysts expect the Naira to trade relatively calm across all segments of the FX market as the recent decision by OPEC+ gradually permeates the global oil market and tickles Nigeria’s reserves with a positive effect on the local currency.

At the investors and exporters window, total turnover or volume of dollars transacted decreased by 42.5% from the beginning of the week to $325.29 million on Thursday, with trades consummated within the N425.00 – 460.00 band.

In the forwards market, the exchange rate appreciated 0.2% to N445.94 across the 1-month contract, the 3-month contract gained 0.3% to N452.02 per dollar.

Likewise, the exchange rate for the 6-month contract appreciated +0.2% to N467.08 and 1-year contract gained 0.7% to N491.70.

“… We think further adjustments in the Naira to Dollar peg closer to its fair value and flexibility in the exchange rate would be significant in attracting foreign inflows back to the market.

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