The naira on Tuesday depreciated against the dollar across the official and the unofficial foreign exchange (FX) markets following a decline in dollar inflows last week.
According to BusinessDay, this was amid the Tuesday pipeline explosion on the Trans-Niger Pipeline (TNP), with a capacity of around 450,000 barrels per day.
The naira depreciated slightly by 0.3 per cent or ₦4.90 as the dollar was quoted at ₦1,532.94 on Tuesday compared to ₦1,528.03 quoted on Monday at the Nigerian Foreign Exchange Market (NFEM), data from the Central Bank of Nigeria (CBN) indicated.
Currency dealers quoted the dollar at the highest rate of ₦1,549.50, stronger than ₦1,552 quoted the previous day. The market recorded the lowest rate of ₦1,522.70, lower than ₦1,512 closed on Monday at the NFEM.
The official FX market window recorded an inflow of $1.0 billion last week, marking a 25.4 per cent decline compared to $1.34 billion recorded in the prior week, according to a report by Coronation Asset Management.
At the parallel market, popularly called black market, the naira closed at ₦1,580, representing ₦5 loss compared to ₦1,575 closed on Monday.
Against other currencies, the naira appreciated by ₦10 as the pound was quoted at ₦2,040 as against ₦2,050 on Monday.
The local currency closed steady at ₦1,700 per euro and v1,150 per Canadian dollar. The Chinese Yuan traded at the rate of ₦1215 in the black market.
An explosion struck the Trans-Niger Pipeline, one of Nigeria’s largest oil pipelines, causing significant disruption and raising concerns about environmental damage and economic losses.
Thus, analysts and currency dealers fear, could affect dollar supply to the economy.
Additionally, Nigeria’s oil sector is facing headwinds as the March 12 crude cargoes remain unsold, highlighting weak demand for the country’s exports.
Traders reported that as of March 10, buyers for these cargoes were still being sought, with much of the April export schedule also available, according to data from Argus.
The oil market experienced significant volatility on the back of concerns of weak demand, rising trade tensions between the U.S. and key trade partners, and OPEC+ production quota increase, according to a report by Afrinvest Securities Limited. Against this backdrop, Brent crude price fell 2.4 per cent week/week to $70.82/bbl from $72.49/bbl previously.