BY FESTUS OKOROMADU, ABUJA
The Nigerian Naira faced continued depreciation during the week ended October 20, reaching new lows, underscoring the challenges the Central Bank of Nigeria face in defending the currency.
This depreciation against the US dollar amounted to 5.68 percent week-on-week at the official market, closing at N808.27/$1, primarily due to a low supply of the US dollar.
In the parallel market, the demand remained high, pushing the Naira further into historic all-time lows.
By the end of the week, the Naira weakened by 11.43 percent week-on-week to a historic low of 1,170/$1, largely attributed to speculative activities, resulting in a market premium of N361.73.
At the FMDQ Securities Exchange FX Futures Contract Market, the US dollar gained strength across various contract tenures against the Naira, appreciating by 2.10 percent, 2.15 percent, 2.03 percent, 1.76 percent, and 2.22 percent at the 1 month, 2-month, 3-month, 6-month, and 12-month forward contracts, closing at N805.92/$1, N816.47/$1, N824.20/$1, N852.67/$1, and N919.65/$1, respectively.
Meanwhile, crude oil prices hovered around $90 per barrel, with potential for further gains after a week of relative stability around $89 per barrel for Brent crude.
Notable developments included the US-Venezuela deal, allowing US oil companies to resume operations in Venezuela, which could impact global oil production.
Additionally, OPEC’s silence on calls for a Russian oil embargo amid rising tensions in the Middle East raised concerns of increased production, which might exert downward pressure on oil prices.
Nigerian Bonny Light crude oil, however, saw a weekly gain, closing at $98.26 per barrel, up from $95.59 per barrel, indicating a 2.79 percent gain for Nigeria in the oil market.
