Naira Falls Across FX Markets
The Nigerian naira loses weight further amidst increasing demand and low supply across the foreign exchange markets, according to market data. The naira recovered after crossing its high spot rate point of N465 last week.
Data from the FMDQ Platform show that the naira exchange rate depreciated against the United States dollar at the Investors’ and Exporters’ foreign exchange window to N463.50 on Monday.
The latest FX rate means a decrease of 0.11 per cent as against N463 it exchanged for the dollar at the close of business on May 19.
According to the currency trading record, the open indicative rate closed at N463.50 to the dollar on Monday. Traders stated that an exchange rate of N467 to the US dollar was the highest rate recorded within the day’s trading before it settled at N463.50.
The naira sold for as low as 460 to the dollar within the day’s trading. FX market traders said a total of 106.84 million dollars was traded at the official Investors and Exporters window. Spot FX rate however remains steadied at the forward market.
The market expects the Central Bank of Nigeria (CBN) to conduct FX auction despite declining external reserves. Large outflows from the country’s foreign reserves will impacts the apex bank’s ability to maintain market intervention, analysts told MarketForces Africa.
Similarly, the parallel market depreciated by 0.70% to N760 from N755 as the gap between forex demand and supply widened. Foreign currency inflow has declined in addition to weak forex receipts from oil exports.
Capital inflows continue to decline, and this remains a key concern in Nigeria, according to analysts. The elevated interest rates by global central banks have continued to reinforce flight to safety as foreign portfolio investors shed their investment portfolio in emerging markets and developing economies in favour of safer haven advanced economies.
Again, FX concerns and inability of foreign portfolio investors (FPIs) to repatriate funds in recent years, amidst poor economic indices continue to deter portfolio investments. The Nigerian equities market has remained bearish with total foreign portfolio decreasing from N122.53 billion to N8.47 billion between April 2018 and April 2023.
Analysts believe that concerns around foreign exchange stability and liquidity will continue to pressure foreign portfolio inflows in the medium to long term, causing free falling of the Nigerian currency across FX markets. #Naira Falls Across FX Markets Naira Steadies as Banks Issue Update on FX Purchase
