Nigeria’s legal tender fell to new all-time lows against the dollar, British pound sterling and euro on Thursday amid Nigeria’s ongoing foreign exchange scarcity.
The naira fell against the dollar, both in the parallel market and in the foreign exchange market of investors and exporters.
Nigeria’s local currency fell from 528/$1 on Wednesday to 530/$1 in the parallel market. It also fell to N720 against the pound in the parallel market of N717/£1 on Wednesday, while the euro rose to N620 from N616 on Wednesday.
In the I&E window, the naira weakened further to 411.67/$1 on Thursday, from 411.50/$1 on Wednesday, according to the FMDQ Group.
According to Financial Derivatives Company Limited, no less than 55 to 60 percent of Nigerian forex transactions are traded in this window, which is used by the CBN and most exporters and investors.
Investors and traders are now anticipating the impending Eurobond issuance – scheduled for September – as it is a potential trigger for much anticipated FX adjustments.
The allocation of special drawing rights (SDR) took place earlier this week, raising reserves by the equivalent of $3.3 billion. The impending Eurobond issuance, which is likely to be around $3-5 billion, could potentially mean the CBN would get a $7 billion reserve boost.