The naira lost value versus the dollar on Tuesday in both the official and unofficial foreign exchange (FX) markets after a sharp decrease in dollars inflow. This is happening in the wake of the Tuesday explosion of the Trans-Niger Pipeline (TNP), (which has a daily capacity of about 450,000 barrels), and the unstable political situation in Rivers State.
A dollar was exchanged for N1,532.94 on Tuesday, March 18 vs N1,528.03 on Monday at the Nigerian Foreign Exchange Market (NFEM), indicating a 0.3%, or N4.90 drop in value.
Coronation Asset Management reported that last week’s forex inflow into the official FX market was $1.0 billion, a 25.4 percent decrease from the $1.34 billion recorded the week before. The naira closed at N1,580 at the black market on Tuesday, in comparison to Monday’s closing price of N1,575 at the black market (parallel market) indicating a N5 loss.
The naira gained N10 in value relative to other currencies, with the pound trading at N2,040 on Tuesday compared to N2,050 on Monday. The local currency exchanged for N1,150 to the Canadian dollar and N1,700 to the Euro on Tuesday. The Naira was exchanged for N1,215 with the Chinese Yuan on the same day.
Trans-Niger Pipeline Explosion Worries Analysts
The Trans-Niger Pipeline, one of Nigeria’s biggest oil pipelines, was hit by an explosion that caused major distress and raised worries about economic stability and environmental harm. 9am News Nigeria is closely following the events unfolding in Rivers State, which has already culminated in the suspension of the State Governor and his Deputy for six months by President Bola Tinubu.
Analysts worry that the current events could impact the supply of forex in Nigeria’s economy. Furthermore, Nigeria’s oil industry is facing difficulties as the crude cargoes from March 12 remain unsold, indicating a lackluster market for the nation’s exports. As of March 10, the oil importers said they were still looking for buyers for the oil in these cargoes.
Afrinvest Securities Limited reported about the sluggish demand in the oil market, growing trade tensions between the US and important trading partners, and an increase in OPEC production quotas which caused the oil market to experience substantial volatility. The price of Brent crude dropped 2.4 percent per week to $70.82/bbl from $72.49/bbl in the week before.
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