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Naira depreciates against dollar across forex market segments amid liquidity crunch

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Naira weakened against the United States dollar across foreign exchange market segments on Tuesday as Nigeria confronts an enduring liquidity crunch that had seen its foreign reserves crumble by $798.899 million to $35.764 billion in the last two months to August 3.

On the black market, the local currency fell to N474 against the greenback, N1 lower than the exchange rate at the previous session, according to Abokifx which collates rates from informal street traders.

Meanwhile, Naira was quoted at N389 on the over-the-counter-spot market, often used by investors and exporters, after touching an intraday high of N392.50.

It had closed at N388.46 on Monday, signalling a modest drop of N0.54.

Read also: Naira gains against dollar at black market, I&E window

An improvement in the size of trade was the redeeming feature of Tuesday’s activities as volume leapt by 43.12 percent to $24.66 million day on day, data from the FMDQ Securities Exchange showed.

Turnover on Monday stood at $17.23 million.

Yet the Tuesday’s figure is well below the pre-pandemic daily levels, with January transactions, for instance, averaging $200 million.

Last week, volume came to $32 million against the $27 million recorded the week before even though sessions didn’t hold on Thursday and Friday due to the Eid-el-Kabir holiday declared by the Federal Government.

The Central Bank of Nigeria (CBN) has been intensifying the campaign in recent times to converge Nigeria’s multiple exchange rates around the one used by over-the-counter spot market in hopes of wooing international investors, a majority of whom exited the economy in the aftermath of the record oil crash in April to seek investment elsewhere.

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