FX: Naira Weakens Against Chinese Yuan
In the foreign exchange market, the Nigerian naira weakens 0.40% against the Chinese Yuan to N61.60, according to data from the Central Bank of Nigeria (CBN) cited by market analysts. The Nigerian local currency has continued to be clouded by the relative strength of its pair trading currencies.
In its market note, Coronation Research hints that the Nigerian Autonomous Foreign Exchange fixing (NAFEX) rate traded within the range of N414-N453.2 per United State dollar last week, though dollar volume transacted expanded.
Analysts noted that the FX spot rate closed at N431.5, pointing towards a depreciation of -0.3% or N1.2 week on week. In the forwards market, the naira was quoted within the range of N429-N451.3 to a greenback.
There was a mixed outing in the forward market as the exchange rate for a 1-month contract depreciated by -1.3% week on week to close at N434.4. Also, the 3-month contract depreciated by -0.9% to close at N440.2.
“Based on our channel checks, we note that in the parallel market, the Naira closed at an average of N700 per US$ on Friday. Therefore, the gap between the NAFEX and parallel market rate is 62.2%”, Coronation Research Chief Economist Chinwe Egwim said.
Meanwhile, data from the FMDQ Exchange platform indicated that NAFEX turnover increased by 9.1% or US$7.8 million in the week to US$93.5 million on Friday. READ: Naira Strengthens Against Dollar, Chinese Yuan
The NAFEX window recorded an inflow of US$88 million with the CBN accounting for 2.7%, foreign portfolio investors (FPIs) accounting for 13.4%, non-bank corporates accounting for 36.4%, exporters accounting for 41.7% and others accounting for 5.8%.
On the hand, Nigeria’s external reserves increased by +0.2% or US$67.4 million to US$39.0 billion.
“We expect the NAFEX rate to trade range bound at N420/US$ – N432/US$ in the near term”, Coronation Research projected. Turning to the Chinese Yuan (CNY), according to data from the CBN, the Naira depreciated by -0.4% week on week to close at N61.6.
