The Naira weakened on the parallel market to 480 to the dollar from 483 amid rising inflation. Nigeria’s main price index jumped to 18.17% in March from 17.33% in February, according to the country’s National Bureau of Statistics.
Food inflation spiked to 22.95% in March from 21.79% the previous month. On the I&E Window, the currency weakened to as low as 437.41 this week, before quickly rebounding to a high of 394.00, and then pulling back to 410.
This volatility is likely to remain, with inflation concerns mitigated by the rise in crude oil prices this year (Nymex settled at $63.38 a barrel on Monday, almost a 31% jump year to date).
Rising oil revenue and increased remittance inflows following the ‘Naira for Dollar’ incentive policy have helped boost foreign exchange reserves from $34.845bn to $35.22bn so far this month, according to the Central Bank of Nigeria. Amidst the swings, we expect the overall trend will be a weakening on the parallel market towards 490 on inflation concerns.
