The exchange rate between the naira and the US dollar depreciated on Monday, 9th January 2023, to trade at an average of N745/$1 on the black market, following two weeks of stability.
This is according to information from black market traders who spoke to RateCaptain. Compared to the N731/$1 recorded last week Friday, naira depreciated by 1.92%.
The naira devalued from N414 per dollar at the end of December 2021 to N459.33 per dollar by early January 2023. This implies a 9.2 percent depreciation was seen from December 2021 to early January 2023. This is worsened by the paucity of dollars in the inflow due to diminishing foreign reserves and the rapid rise in demand for foreign currency by Nigerians wanting to settle import bills, school fees, and other family and corporate entity demands.
The naira has reached all-time lows at several points throughout the year under review, putting significant pressure on domestic pricing of goods and services, particularly food costs.
FOREIGN RESERVE
According to data from Nigeria’s central bank (CBN), the gross foreign reserve increased by $10.12 million to $37.16 billion on January 6, 2023, up from $37.15 billion on January 4, 2023. A variety of variables has influenced the evolution of Nigeria’s foreign exchange market, including shifting patterns of international commerce, economic institutional changes, and structural adjustments in production. The CBN data revealed an unstable trend in the country’s foreign reserves, which stood at N37.08 billion on December 30th, 2022, but fell to N36.07 billion on January 3rd, 2023. It has recently been on a steady rise from January 4th to January 6th, 2023, and counting. The volatile trend in the external reserve is reflected in the steady rise in global oil prices, which have risen amid fears of a global economic shock from Russia’s invasion of Ukraine. According to Rate Captain Analyst, focusing more on agriculture and exporting more agricultural products will boost Nigeria’s external reserves while also creating a welcoming environment for foreign investors.
CAPITAL MARKET UPDATE
The Nigerian stock market closed the trading session with the NGX All Share Index (ASI) increasing by 0.69 percent from 50,868.52 on January 5 to 51,222.34 on January 6. As of the close of the market on Friday, the stock market value stood at N27.8 trillion. Since the start of the year, the stock market has advanced by 373.32 basis points, or 0.72%, with the trading volume amounting to N1195.7 million and a total market cap of N27.899 trillion.
The Nigerian stock exchange closed the first trading week of January 2023 negatively as NPFMCRFBK led 16 gainers with an increase of 9.55 percent to close at N1.72, followed by NEIMETH with an increase of 8.39 percent to close at N7.20. PZ Limited topped the 18 losers with a decrease of 9.09 percent to close at N11, followed by CHIPLC with a decrease of 7.69 percent to close at N0.60.
