Nigerian Naira on see-saw as it drops to N1,105 to a dollar then N800 on the official market Abuja expects $10 billion in crude oil sales and foreign investment within weeks
$1.1 billion civil claim against Italian oil giant Eni dropped
Nigeria’s naira briefly slumped to a record low against the dollar in thin trading on the official market on Thursday, bringing the official exchange rate within touching distance of the parallel market rate.
The currency of Africa’s biggest economy fell as low as 1,105 Naira to the dollar from 830 at Wednesday’s close, LSEG data showed, before recovering to trade firmer on the day around 800 to the dollar.
The Central Bank of Nigeria (CBN) has not commented on the Naira’s fall or its plans for the currency.
The Naira’s official exchange rate has been drifting towards the parallel market level for the past two weeks, traders said.
Nigerian Finance Minister Wale Edun
The Naira was quoted at 1,135 to the dollar on the parallel market on Thursday, while lenders had been quoting the currency within a range of roughly 750 Naira to 990 Naira on the official market before Thursday’s trade.
The central bank has not intervened on the official market since October, which has helped accelerate the Naira’s slide, traders said.
Nigeria expects $10 billion in foreign currency inflows in the next few weeks to ease liquidity in a foreign exchange market that has cramped growth in Africa’s biggest economy, finance minister Wale Edun said in October.
The West African country has faced chronic dollar shortages after foreign investors exited local assets during a period of low oil prices. Since then, investors are yet to return and the central bank has not yet settled outstanding demand for dollars from foreign investors seeking to repatriate funds or airlines seeking to send money from ticket sales abroad.
The logo of Italian energy company Eni is seen on a booth stand during the Nigeria International Petroleum Summit in Abuja, Nigeria February 11, 2020. REUTERS/Afolabi Sotunde/File Photo
As a result of the shortages, some businesses and individuals have turned to the black market, where the naira currency has hit successive record lows, widening the gap with the official rate.
President Bola Tinubu signed two executive orders to allow domestic issuance of instruments in foreign currency and also allow all cash outside the banking system to be brought into the banks.
“There is a line of sight on $10 billion worth of inflow of foreign exchange in a relatively near future, in weeks rather than months,” Edun told a business conference.
He added that liquidity would also come from state-oil firm crude sales and foreign investment firms willing to invest in Nigeria.
“These measures taken as a whole and comprehensively should lead to the flow of foreign exchange.”
Tinubu has promised that all forward contracts entered into by the government would be honoured while the country’s central bank governor said the currency would adjust once rules for market participants were made clear.
In a bid to attract the much needed foreign investment in the crude oil sector, Bloomberg News reported on Thursday that Nigeria is withdrawing civil claims totalling $1.1 billion against Italian energy group Eni and related to allegations of corruption in a oilfield deal.
The justice ministry will waive the claims before Italy’s highest court “unconditionally” and “with immediate effect” no later than Nov. 17, the report said citing a letter regarding the OPL 245 field and seen by the newswire.
In 2021 a Milan court acquitted Eni, its chief executive and Shell over a corruption case revolving around the acquisition of the Nigerian oilfield.
Last week the naira recovered from a record low of 1,300 on the parallel market after the central bank sold dollars to 14 lenders to clear outstanding currency forwards. Some other lenders are yet to get settlement.
The government has said it is expecting $10 billion in foreign currency inflows that will improve market liquidity, but it is not clear when those funds will arrive.