Naira appreciates as FX demand pressures subsides

Blueprint Whatsapp

The Naira appreciated against the United States dollar and other major currencies as demand pressure subsided, according to trading data.

A similar scenario was spotted in the parallel market amidst election spending and late-year import demand by economic agents.

At the investors’ and exporters’ foreign exchange (FX) market, the exchange rate settled at N445.33 from N446.33 despite moderation in the foreign currency supply, data from FMDQ Exchange tracked show.

Meanwhile, FX spot rates differ across alternative channels. Bureau de Change operators sold dollars between N745 to N750 as of Friday’s close. Meanwhile, rates were around N780 at the beginning of the week.

According to MarketForces Africa, Nigerian banks sold dollars for end users for online channel payments between N490 and N499 as of Friday, according to checks conducted by MarketForces Africa with the top five banks via debit cards.

At the official FX market, there was a noticeable decline in foreign currency supply up till Thursday. Cordros Capital reported that at the Investors and Exporters FX window, total turnover fell by 14.8 per cent to $460.25 million, with trades consummated within the NGN410.00 – 444.00/$ band.

Analysts at the

investment said they expect the FX liquidity issues to remain over the short-to-medium term in the absence of any positive signal that denotes an improvement in foreign currency supply relative to the pre-pandemic levels.

Cowry Asset Management said, “We saw the Naira experience another calm in demand in the foreign exchange market as Bureau De Change (BDCs) operators cut rates in a bid to attract users of the greenback just as we inch closer to the official date of the release of the redesigned Naira notes by the CBN”.

Consequently, at the open parallel market FX window, the Naira strengthened further by N28 or 3.6 per cent week on week to close the week at N747 from N775 in the previous week’s close. At the interbank foreign exchange forward contracts market, the spot exchange rate remained unchained from the previous week as it closed the week at N445 from last week.

In the forwards market, the rate weakened by 1.8 per cent for a 1-month contract to N460.03; a 3-month contract lost 2.7 per cent to N471.58 per United States dollar. Similarly, 6-Month contracts contrast by 3.1 per cent to N491.30 and 1-year contracts dropped by 4.3 per cent to N473.02.For thirteen weeks straight, Nigeria’s gross external reserve recorded another decline, weeks, falling by $59.56 million last week to $37.11 billion, according to data from the Central Bank of Nigeria.

Related content you may like