Naira Reclaims Small Value after Forex Liquidity Boosts
The Nigerian naira reclaimed small amount of value it had lost in the currency market on Monday. The Nigerian naira closed the trading session on the positive side on Monday, having appreciated by 0.66% to #1476.12 per unit of US dollar at the autonomous FX market.
The mild exchange rate gain was supported by the Central Bank of Nigeria (CBN) FX sales, which boosted US dollar liquidity last week. The monetary authority intervened in the forex market five times last week to stem the tide in the currency market.
In a chat with MarketForces Africa, a slew of currency, forex analysts said recent moves by the authority to boost FX liquidity in the market have not significantly impacted exchange rates. The CBN sold FX five times in the past week, but the naira ended on a negative note.
Analysts explain that unmet demand easily soaked up fresh forex injection at the official window, leaving no traces on exchange rate
“There is hope the naira will recover if the CBN maintains market intervention in successive manners, having claimed the local currency is grossly undervalued. To upturn the negative movement and perception about the naira, there’s a need for large FX inflows into FX windows, analysts told MarketForces Africa.
The future of the local currency hangs on lower import taste of the citizens and more FX receipts from exports, LSintelligence Associates research note shows. At the alternative FX market for invisible trades, the local currency has continued to gain strength against the US dollar following combative measures introduced recently by the government.
The exchange rate was, however, flat in the parallel market at the beginning of the week as strike action paralyzed business activities.
Nigerians have been betting against their own currency for quick bucks for decades. This reduced FX stability and worsened market rates as the parallel market became the benchmark for trades for fintech and payments gateway platforms.
Banks have also used naira disadvantages to their advantages to boost earnings. Critics believe local bankers made huge income from FX policy lapses over the decades. Recently, the apex Bank accused banks of sharp practices. With a flurry of circulars directed to correcting loopholes, the central bank directs Nigerian lenders to sell down their foreign assets holdings.
In the parallel market, exchange rate traded steady at N1,445 per US dollar as demand pressure eased. In the global commodity market, oil prices experienced a negative outcome. Brent crude decreased by 2.75%, to settle at $78.88 per barrel, and WTI crude saw a decline of 2.96% to $74.71 per barrel on Monday. #Naira Reclaims Small Value after Forex Liquidity Boosts Stock Recommendation: Afrinvest Sees 26.4% Upside in Zenith Bank
