Naira Drops to N1,378 as FX Payments Eclipse Supply
The naira’s purchasing power dropped sharply at the official window as foreign payments initiated exceeded the US dollar liquidity at the currency market.
Daily FX data published by the Central Bank showed the naira declined 1.06% to N1378.02 per dollar, from N1363, reflecting surging demand for imports and other payments.
The naira faced pressure last week across five trading sessions despite FX interventions, a resultant effect of the Apex Bank’s decision to mop up dollars from the currency market the previous week.
The Central Bank of Nigeria (CBN) sold $200 million to boost the supply side and moderate demand pressures. For February, the CBN operated on both sides of the market, selling $225 million and purchasing $261.80 million, according to a report from TrustBanc Financial Group.
The naira depreciated week-on-week by ₦2.21 in the official window and ₦60.00 in the parallel market, closing at ₦1,363.39/$ and ₦1,400.00/$, respectively, the investment firm said.
In the Nigerian foreign exchange market, the naira appreciated by 1.70% in February, and the local currency gained 4.29% in the parallel market, bringing year-to-date performance to +5.31% and +5.00%, respectively as of Friday close.
In a note, the research subsidiary of Coronation Merchant Bank said FX liquidity improved significantly last week. Total FX inflows into the official window rose to US$1.07 billion from US$648.20 million in the prior week.
Foreign Portfolio Investors (FPIs) remained the dominant source of supply, accounting for half of the inflows, US$544.30 million (50.71%). Exporters followed with US$305.2 million (28.43%), while non-bank corporates contributed US$120.5 million (11.23%).
Individuals accounted for US$7.80 million (0.73%), and other sources (including FDIs and other corporates) contributed US$95.50 million (8.90%). #Naira Drops to N1,378 as FX Payments Eclipse Supply Nigeria’s Private Sector Activity Deteriorated in January -Stanbic IBTC
