Naira Skids over CBN Absence in FX Market for 5-Week
In the foreign exchange market, the Nigerian Naira depreciated by 2.48% in the official market, closing at N814.60 to the dollar from N794.89 per dollar.
A review of data from the FMDQ FX OTC platform showed that the large daily depreciation of the local currency was due to heavy demand for the US dollar. A number of companies are in the midst of seasonal imports that require FX settlements.
Last week, the Central Bank chief said the persistent depreciation of the naira poses a significant risk for domestic banks with foreign exchange exposures. Some banks’ balance sheet break due to high FX liabilities, according to details from their respective unaudited financial statements.
MarketForces Africa reported that the NAFEM rate traded within the range of N600-N1136/USD but closed at N794.9/USD on Friday.
This points towards a depreciation of -0.4% or N3.1 as of Friday’s close, Coronation Research said in an update. In the forwards market, fx traded within the range of N899.5-N922.61 USD.
In the 1-month contract, fx depreciated by -5.4% week on week to close at N911.0/USD, and in the 3-month contract, fx depreciated by -5.8% to close at N941.4/USD.
In the parallel market, the Naira’s performance remained subdued, closing at N1,158 against the US dollar. The exchange rate at the space had closed at N1155 on Friday.
Nigeria still facing acute foreign currency supply even when import appetite has continued to rise in a nation that depends on imported goods and services to survive.
Africa’s largest by size of GDP external reserve hovered around $33.2 billion after a sustained decline amidst an increase in oil production volume.
In the global commodity market, Brent Crude declined by 0.86% to trade at $79.89 per barrel, while the WTI Crude also faced a decline of 0.73% to $74.99 per barrel.
“Based on our channel checks, we note that in the parallel market, the Naira closed at an average of N1,155 on Friday. Therefore, the gap between the NAFEM and the parallel market rate is 31.2%”, Coronation Research said in a new update.
Citing data from FMDQ, analysts reported that NAFEM turnover decreased by -18.4% or -USD155.0 million w/w to USD687.5m on Friday.
The NAFEM window recorded an inflow of USD 42.2 million as currency traders at Coronation said there were no injections made by the CBN for the fifth consecutive week.
However, foreign portfolio investors (FPIs) accounted for 20.1%, non-bank corporates accounted for 52.5%, exporters accounted for 26.9%, and others accounted for 0.5%. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
