The naira depreciated against the dollar on Tuesday across both official and parallel foreign exchange (FX) markets, following a drop in dollar inflows last week.
This development coincided with an explosion on the Trans Niger Pipeline (TNP), which has a capacity of approximately 450,000 barrels per day.
According to data from the Central Bank of Nigeria (CBN), the naira weakened by 0.3 percent (N4.90), with the dollar quoted at N1,532.94 on Tuesday, compared to N1,528.03 on Monday at the Nigerian Foreign Exchange Market (NFEM).
Currency traders reported the highest dollar exchange rate at N1,549.50, slightly stronger than N1,552 quoted the previous day, while the lowest trade was recorded at N1,522.70, weaker than Monday’s closing rate of N1,512.
A report by Coronation Asset Management indicated that the official FX market recorded $1.0 billion in inflows last week, reflecting a 25.4 percent drop from the $1.34 billion recorded the previous week.
In the parallel market, commonly known as the black market, the naira fell to N1,580 per dollar, marking a N5 decline from Monday’s closing rate of N1,575.
However, against other major currencies, the naira strengthened. The British pound was quoted at N2,040, improving from N2,050 on Monday. The local currency remained stable at N1,700 per euro and N1,150 per Canadian dollar, while the Chinese yuan traded at N1,215 in the black market.
The explosion on the Trans-Niger Pipeline, one of Nigeria’s largest crude oil transportation routes, has sparked concerns about potential disruptions to oil revenue and foreign exchange inflows.
Analysts warn that this incident, coupled with challenges in Nigeria’s oil sector, could further strain FX liquidity. Reports indicate that as of March 10, buyers were still being sought for Nigeria’s March crude cargoes, with a significant portion of April’s export schedule also yet to be sold.
The global oil market has also faced volatility due to weak demand, rising trade tensions involving the U.S., and an increase in OPEC+ production quotas. A report by Afrinvest Securities Limited noted that Brent crude prices declined by 2.4 percent week-on-week, falling from $72.49 per barrel to $70.82 per barrel.
Leave a Reply