Foreign investors that sold currency securities in the last one month have been unable to repatriate the proceeds to their countries due to persistent dollar scarcity, The Nation has learnt.
Many of the investors cash are trapped in Nigeria’s debt market as dollar liquidity dries up due to a lack of fresh inflows and persistent drop in crude oil prices. Crude oil revenue constitute over 90 per cent of foreign-exchange earnings for Nigeria.
Value of dollar transactions in the Investors’ and Exporters’ (I&E) Forex Window where foreigners buy dollars has dipped from $300 million per day two months ago to $20 million.
The naira has also depreciated past N498.5 to dollar on the one-year non-deliverable forwards markets following the continued drop in crude oil prices and consistent dollar scarcity.
One-year dollar/naira non-deliverable forwards stood at N498.5 points, up from previous close of N492.4. The naira saw one its biggest hit against the dollar after a historic oil price rout pushed United States crude futures below zero.
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.
Foreign reserves have fallen 12 per cent this year to $33.8 billion, raising concerns on the sustainability of the weekly. The naira has weakened 11 per cent to N425 to dollar in the parallel market since March 20 when CBN stopped foreign exchange interventions.
Analysts had tipped the naira to depreciate by about 20 per cent in the parallel market by next year as the impact of falling crude oil prices persists.
Source:
Colins nwaeze
