Naira Holds Strong amidst CBN Inaction
The Nigerian Naira consolidates its position on Thursday as it exchanged at N461 to the United States dollar at the Investors and Exporters window. The rate represented an increase of 0.05 per cent, compared to the N461.25 for which it exchanged to the dollar on Wednesday.
The exchange rate improved over increased inflows from exports while import bills stayed within range, according to market analysts, saying the key downside to the upside remains persistent disequilibrium between demand and supply in the market.
Despite FX scarcity, demand for the US dollar for eligible imports has always maintained an uptrend above foreign currencies inflows from exporters, foreign portfolio investors and the Central Bank of Nigeria (CBN) via FX auction.
Last week, inflow to the Investors and Exporters FX market improved by about 11%, Cordros capital analysts told clients via email.
According to data from Nigerian Autonomous Foreign Exchange Fixing (NFAEX) market, the open indicative rate closed at N461.25 to the dollar on Thursday. Traders reported that an exchange rate of N462.11 to the US dollar was the highest rate recorded within the day’s trading before it settled at N461.
The Naira sold for as low as N446 to the dollar within the day’s trading. A total of 82.83 million dollars was traded at the official Investors and Exporters window. Likewise, the parallel market appreciated by 0.53% to N750 from N754.
Nigerian businesses are weighing the costs of naira scarcity and its immediate impacts on activities. Foreign exchange analysts said the exchange rate has been steadied for two days and could last longer if importers held back from making further dollar-denominated orders.
Companies in Nigeria are operating partially as naira scarcity tempers aggregative consumption. The impact is being felt across the nation while both the Federal government and CBN keep mum over the Supreme Court judgment that upturn naira redesign policy.
At the press time, Nigerians have not heard from the apex bank whether old and new naira notes have been accepted as legal tender following a court order as new notes scarcity nearly cripple economic activities. #Naira Holds Strong amidst CBN Inaction