Naira Faces Selloffs, Forex Demand Climbs at Official Window
The naira weakened against the dollar on Tuesday, declining 0.39% to ₦1,463.23 at the Nigerian foreign exchange market. For the second days, the naira lost value as the greenback gained momentum across the global forex market today.
The greenback has seen about a 3% uptrend against a basket of currencies (DXY) since mid-September, recovering from more than three-year lows after falling nearly 11% earlier this year.
Updated FX data from the Central Bank of Nigeria (CBN) showed that US dollar demand pressures lifted the intraday spot rate to N1474, depreciated by N11 over N1463 per dollar traded the previous day at the official market.
In the parallel market, the naira fell to N1490 per dollar, indicating reduced demand for the local currency. At best, intraday transactions at the official window was closed at N1467, which is N10 above Monday’s close of N1457 per dollar.
The Naira strengthened across both official and parallel markets last week, buoyed by sustained CBN interventions and foreign inflows during the week.
At the official window, the local currency appreciated by 1.02% week on week to close at N1,455/US$1, while in the parallel market it advanced to N1,465.00/US$1.
Consequently, the gap between the two markets flipped to N10.68 as speculative activities eased, especially as the seasonal demand hike normally seen before the new academic year and the end of the summer holiday period.
In a note, Coronation Merchant Bank Limited reported that activity levels moderated slightly at the official window, where total FX inflows climbed to US$835.60 million versus US$1.18 billion in the prior week.
By composition, foreign portfolio investors contributed the largest share at US$259.11 million (31.0%), followed by exporters (20.30%), foreign direct investments (19.9%), and non-bank corporates (8.9%).
Contribution by the CBN accounted for 14.89% of FX inflows, and other sources supplied 12.2%.
“We expect the Naira to maintain its positive trajectory across FX segments this week, underpinned by CBN support and foreign inflows, barring any external domestic and global shocks,” Coronation Merchant Bank research subsidiary said. Top Cryptocurrencies Rises as Markets Eye Fed Rates Cut
