Naira Breaks Psychological Barrier, Trades Below N1500/USD
The naira has successfully broken a new psychological barrier in FX market, closing below N1500 per US dollar at the Nigerian Foreign Exchange Market (NFEM). The local currency has continued to claw back against the US dollar due to sufficient US dollar liquidity in the forex market.
Official spot rate touched intraday low of N1493 per dollar, according to FX update from the Central Bank of Nigeria (CBN) platform on Monday. Some corporate transactions were closed at intraday high of N1502 per dollar.
Inflows from exporters, foreign portfolio investors who are ready to position for anticipated OMO bills auction boosted US dollar volume in the currency market. The supply side was further strengthened by inflows from the International Oil Companies – IOCs.
Last week, the Naira posted a strong performance against the US Dollar. At the Nigerian Autonomous Foreign Exchange Market (NAFEM), it appreciated by 0.98% w/w to close at N1,501.50/US$1.
The parallel market also strengthened by 0.33%, settling at N1,535.00/US$1. As a result, the official rate ended the week at a N35.50 (2.23%) premium to the parallel market rate.
In a note, Coronation Merchant Bank research units said total FX inflows settled at US$550.90 million, slightly below the US$567.20 million recorded in the previous week.
Foreign Portfolio Investment (FPI) remained the dominant source, contributing US$303.8 million to FX inflows, which accounted for 55.15% of the market liquidity. Exporters followed with 17.61%, while Non-bank corporates accounted for US$91. 3 million, accounting for 17.57% of total inflows.
Other corporates provided US$23.8 million (4.32%), Foreign Direct Investment (FDI) US$18.7 million (3.39%), the CBN US$13.0 million (2.36%), and Individuals US$3.3 million (0.60%).
Meanwhile, gross external reserves rose by US$357.84 million to US$41.66 billion, supported by steady daily accretions throughout the week.
Analysts expect the Naira to trade within a narrow band in the near term, buoyed by sustained FPI inflows and healthy external reserve levels.
However, pressure could re-emerge if portfolio flows moderate or if FX demand rises sharply ahead of the year-end festive season. #Naira Breaks Psychological Barrier, Trades Below N1500/USD Bitcoin Price Estimated to Drop by 12% in Sept – Traders
