Babajide Komolafe & Hector Igbikiowubo
6 January 2009
THE Central Bank (CBN) has further depreciated the Naira as it increased the official exchange rate to N135.62 per dollar. This represents 435 kobo or 3.3 per cent depreciation when compared with closing rate of N131.27 last week.
Meanwhile, crude oil prices have risen above $47 per barrel owing to the unrest in the Niger Delta and the Israeli ground offensive in the Gaza strip as well as the current dispute between Russia and Ukraine over gas imports.
Although the apex bank is yet to release the result of the foreign exchange trading for yesterday, Vanguard was reliable informed by money market sources that the official exchange rate rose to N135.62 per dollars. However, the interbank foreign exchange rate dropped to N137 per dollar from N139 last week The drop in interbank rate was attributed to the supply of foreign exchange by the CBN yesterday.
Vanguard investigation revealed that the depreciation of the Naira might have been occasioned by huge demand for foreign exchange yesterday, resulting from the two weeks closure of the Wholesale Dutch Auction (WDAS) forex auction.
Last year foreign exchange purchased by banks under the WDAS rose sharply by 26 per cent while the Naira suffered 14.6 per cent depreciation on the average across the three segment of the market.
Analysis of WDAS report for 2008 showed that foreign exchange purchased by banks rose from $9.33 billion in 2007 to $ 11.777 billion. Also, the Naira depreciated by 12.9 per cent at the segment of the foreign exchange market while it depreciated by 12.4 per cent and 18.6 per cent at the official and Bureau De change (BDC) segment respectively.
From January to November, the official exchange rate hovered around N116.5 and N116.8 per dollar, while the inter-bank rate ranged from N117.5 from N118.7. The BDC rate also remained relatively stable at N118 during this period.
The official exchange rate, however, rose to N131.27 per cent in December, from N116.81 per dollar in January.
The inter-bank foreign exchange rate also rose to N133.03 per dollar from N117.76 per dollar in January, while the BDC exchange rate also rose from N118 per dollar to N140 at the close of business in December. Consequently, the Naira lost N15.43, N14.46 and N22 at the inter-bank, official and BDC segments respectively during the year.
Crude rises above $47pb
However, fears of a crisis-prone 2009 budget started easing as Israeli ground offensive in the Gaza strip, and increased unrest in the Niger Delta where militants have blown up a supply pipeline shutting in an extra 200,000 barrels of oil drove crude oil prices above $47 per barrel.
Although crude oil prices were buoyed by the latest development here when contacted, Brig. Gen. Wuyep Rimtip said at the weekend he did not know how severely the pipeline was damaged and suspected local youths rather than militants as responsible for the attack.
Nigeria's major militant group, the Movement for the Emancipation of the Niger Delta, declared a cease-fire in September, but has warned that attacks could resume if provoked.
Meanwhile, some analysts insist there's more than just unrest in the Middle East behind the rally.
Light, sweet crude for February delivery rose 92 cents to $47.26 a barrel on the New York Mercantile Exchange, after jumping $1.74 on Friday to settle at $46.34.
Energy consultancy Cameron Hanover said some traders like to point to violence in the Middle East as a cause of higher oil prices, but the reality is slightly different.
"Any time that prices react by moving higher, in response to violence in the Middle East, particularly in non-oil producing countries like Israel or the Palestinian territories next door, it is a good sign that the market wants to move higher," the firm said in its Daily Energy Hedger report yesterday.
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