Exchange Rates Improve across FX Markets
Exchange rates improved Tuesday across the foreign exchange markets amidst fresh foreign investors’ exits from the local economy.
The Nigerian Exchange said in its report that foreign portfolio investors’ transactions dropped in April. Also, foreign direct investment declined as the market faces a scarcity of US dollars.
At the investors’ and exporters’ fx window, the Naira strengthened against the greenback, trading higher at N462.3 from N463.
Likewise, the parallel market appreciated by 0.14% to N738 from N739 following a slowdown in demand for foreign currencies.
In the global FX market, this week the global story and the EUR/USD move will be the main driver for the region. Global conditions remain positive, however, the Fed and European Central Bank meeting this week will be key.
On Friday, the Nigerian autonomous foreign exchange fixing (NAFEX) rate traded within the range of N415-466 but closed at N463.0, according to data from the FMDQ platform. This points towards an appreciation of +0.1% or N0.7 week on week.
In the forwards market, fx traded within the range of N462-478.6. In the 1-month contract, fx depreciated by -0.2% to close at N469.7, and in the 3- month contract, fx depreciated by -1.3% w/w to close at N496.2.
In the retail secondary market intervention sales (SMIS) market, the fx spot rate remained unchanged to close at N462 on Thursday. FX analysts told MarketForces Africa that CBN has improved on its market intervention lates.
Coronation Research said the gap between the NAFEX and the parallel market rate is 60%. According to data from FMDQ, NAFEX turnover decreased by -24.8% last week to USD323.7 million on Friday
The NAFEX window recorded an inflow of USD214.2m with the CBN accounting for 2.9%, FPIs accounting for 1.5%, non-bank corporates accounting for 37.5%, exporters accounting for 53.9%, and others accounting for 4.2%.
