Naira falls N413 to dollar after Nigeria recorded its first case of coronavirus

The naira on Friday depreciated past N400 to dollar at the forward market after Nigeria recorded its first case of coronavirus.

Naira falls N413 to dollar after Nigeria recorded its first case of coronavirus

The naira was priced much weaker at N413.55 to the dollar in a year, compared with the N399.73 it traded at two weeks ago, Reuters report said.

A forward market is an over-the-counter marketplace that sets the price of a financial instrument or asset for future delivery. Forward markets are used for trading a range of instruments, especially at the foreign exchange market.

Analysts had tipped the naira to depreciate by 10 to 20 per cent in the parallel market by 2021 as the impact of falling crude oil prices and foreign exchange reserves persist.

Local and foreign analysts predicted that a decline by 10 per cent would take the naira to about N400 to dollar, while a 20 per cent drop would see it at around N450 to dollar.

According to Bloomberg survey of investors, the local currency may be marked down by up to 20 per cent in 2021.

According to the survey, the drop in foreign reserves and lower oil prices will probably force the Central Bank of Nigeria (CBN) to devalue the naira, seen as one of the world’s most stable currencies by next year.

The continued stability of the naira against the dollar has continued to spark speculations, with many analysts predicting that the local currency will sooner or later be devalued.

The Bloomberg survey of investors and analysts, showed that 10 out of 19 respondents expect the naira to be weakened in 2021, while five predict a mark-down as early as the second half of this year.

The remainder believe the CBN will keep a firm grip on the currency until 2022 or 2023.

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