Just few days to the earlier scheduled deadline by the Central Bank of Nigeria for the disbursement and return of the old local currency, the apex bank announced a 10-day extension following the approval by the presidency.
This development has met with several reactions which trailed the drive to cashless policy as Nigerians face a double whammy of naira notes scarcity and fuel scarcity.
Consequently, many currency traders have
resorted to arbitrage trade opportunity by somewhere around 8% to 10% per transaction which, the CBN, on Friday, said will get stopped.
In the just concluded week at the investors’ and
exporters’ FX window, the Naira edged out the
dollar by N0.25 or 0.05% week on week to close at
N461.50/USD from N461.75/USD in the previous
week despite the growing FX pressure on the naira
and the newly redesigned currency circulation
On the other hand, the Naira gained strength against the dollar at the parallel market as the naira value depreciated by 0.27% or N2 week on week to N750/USD from N748/USD last week.
Thus, market players maintained bids between N460/USD and N465/USD at the I&E segment while in the open market, bids ranged between N745/USD and N752/USD.
A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchained from the previous week as it closed the week at N445/USD from last week.
Also, in our analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets, it was a mixed trend across all forward contracts as the short-dated tenors depreciated by 0.8% and 0.16% for the 1-month and 3-month tenors which closed at N483.43/USD and N489.61/USD.
On the contrary, the long-date tenor contracts appreciated against the greenback by 0.06% and 8.50% week on week to close at contract offer prices of N506.18/USD and N487.41/USD respectively.
The 2-month forward contract was mute at N487.39/USD.
In the oil market this week, Oil price oscillation was nonstop as it traded at above $80 per barrel despite the outcome from the January 2023 Fed meeting where it hiked interest rates by 25 basis points from 50bps in December.
On the home front, we saw the Bonny light crude price reacted to factors playing in the oil market by 6.4% or (USD5.6) week on week to close at USD82.12 per barrel from USD87.69 per barrel.
The cashless policy drive of the central bank may see more Nigerians in double-whammy as the ongoing currency and fuel scarcity fiasco may likely leave many in perilous times with some unorganized currency traders taking undue advantage over the situation despite the efforts to by the apex bank to meet the rising demand with its limited currency supply.
As the deadline for deposition of old banknotes inch closer, demand pressure is expected to stay unabating following the limited supply of the local currency as we transcend gradually into the cashless economy while we stay on the look for the multiplier effect of the cashless policy across all facets of the economy.