Naira Falls as Data Shows FX Market Inflows Reduce
The naira falls again, albeit slightly in the foreign exchange (FX) market, as data showed that inflows dipped. Demand for foreign currency increased in the forex market amidst subdued liquidity.
The Apex Bank has gotten to a comfortable exchange rate level, analysts said in chat with MarketForces Africa, quoting official statement that the latest exchange rate has given opportunity for Nigerians to ramp up exports.
“The thing is, what can Nigeria exports? It is an industrilised nation that reap benefits from exports not a country without comparative advantage in anything”, a financial expert who preferred not to be mentioned said.
According to spot data from the FMDQ platform, the naira depreciated by 4bps to N1,631.17 in the Nigerian Autonomous Foreign Exchange Market (NAFEM). This has widened declined in naira value to N31 after exchange rate opened the week at N1600 per greenback.
.Last week, the naira traded within the range of N1,600 – N1,654.1, closing at N1,600.0 in the spot market. Based on channel checks conducted by Coronation Research, in the parallel market the Naira closed at an average of N1,740.
The gap between exchange rates at the official and parallel market settled at 9%, significant spread that could spur speculative activities in the forex market.
Analysts noted that total US turnover at the Nigerian autonomous forex market declined by 39.9% or US$1.05 billion to close at US$1.6 billion on Friday. Naira Rises against US Dollar Ahead of Sept. FX Auction
Demand for US dollar has remained elevated and this trend has consistently gulping FX auction sales by the Apex Bank. On the supply side, the Nigerian autonomous FX window recorded an inflow of US$847 million last week, analysts said in a report.
The breakdown showed that the Central Bank of Nigeria (CBN) accounted for 11.3% of the total inflow. The data showed that foreign portfolio investors (FPIs) contributed 22.5% of the inflows recorded in the market last week.
In addition, non-bank corporates (20.5%), exporters (25.4%), and others accounted for (20.3%) of total FX inflows that supported liquidity in the currency market. Oil prices surged by over 1% following unexpected declines in U.S. crude and gasoline inventories and speculation that OPEC+ might postpone an oil output increase.
Today, Brent crude climbed to $72.40, while US benchmark West Texas Intermediate (WTI) rose to $68.43. Similarly, gold prices hit a record high of around $2,800.40 per ounce.
The surge, according to analysts, was driven by safe-haven demand amid U.S. presidential election uncertainty and anticipation of economic data influencing the Federal Reserve’s policy decisions.
#Naira Falls as Data Shows FX Market Inflows Reduce
