Nigeria central bank lifts forex ban on 43 items<\/a><\/strong><\/p>\nJPMorgan calculated that the country’s net FX reserves stood at $3.7 billion as of the end of 2022, “significantly lower” than prior estimates.<\/p>\n
Nigeria’s crude excess account only has $473,755, the National Economic Council said in August, down from a peak of $20 billion in 2008, after successive governments withdrew dollars to support the naira and budget spending.<\/p>\n
WILL THE CENTRAL BANK RESTORE FOREX OPEN POSITIONS?<\/h2>\n Nigerian banks are not allowed to have open positions on the dollar, meaning that they cannot buy forex for their own account from the market or speculate on the value of the currency.<\/p>\n
Banks use their open net positions on foreign currency to finance short-term trade lines without resorting to the central bank for bidding. That means banks “make the market” for dollars and provide two-way quotes for buying and selling the currency, effectively creating a fully functioning forex market.<\/p>\n
A trader said if banks were allowed to make the market on the dollar, the local currency could weaken further because they would sell to customers at rates determined by demand and supply.<\/p>\n
Nigeria’s 2024 budget assumes a benchmark exchange rate of 700 naira to the dollar. The finance minister says the parallel market rate of 1,300 naira does not reflect the true value of the local currency.<\/p>\n
“Given that the naira remains much weaker on the parallel market, further devaluations \u2013 and rises in inflation \u2013 are likely,” Capital Economics said in a research note.<\/p>\n
Reuters<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n <\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
Nigeria’s naira is on the brink of breaching 1,000 per dollar after falling to an official record low of 999 last week, Refinitiv data showed, tracing its weakness on the unofficial market where it trades […]<\/a><\/p>\n<\/div>","protected":false},"author":2,"featured_media":15224,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,3,2],"tags":[625,1871,444,41],"coauthors":[25],"class_list":{"0":"post-15267","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"category-latest-news","9":"category-top-news","10":"tag-dollar","11":"tag-forex","12":"tag-naira","13":"tag-nigeria"},"yoast_head":"\nExplainer: What is pushing Nigeria's naira to record lows? - The Daily Leaks<\/title>\n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n