Naira Holds Strong at Official Window, Parallel Market
Naira, the Nigerian local currency, holds strong at the official foreign exchange (FX) window as well as in the parallel market in the just concluded week. Demand pressures in the foreign exchange market began to settle as the exchange rates switched to recovery mode, tracking above the pre-pandemic level amidst a call for devaluation.
In the FX markets, exchange rates are still relatively high, having crossed the pre-primary elections levels, but then the spread between official and parallel market rates shrank. In the week, Nigeria’s external reserves inched upward moderately.
Elsewhere, Bureau de Change (BDCs) operators checked were quoting different rates.
Meanwhile, Nigeria’s FX reserves recorded yet another foreign currencies inflow, growing by $220.04 million to $38.88 billion compared with the previous, but below psychology level of $40 billion. Across the FX windows, the naira appreciated by 0.3% to N420.13 per the United States dollar at the Investors and Exporters window.
At the Investors and Exporters FX window, total turnover declined by 25.5% from the beginning of the week to $427.94 million on Thursday, with trades consummated within the N410.00 – N453.55 band, according to Cordros Capital market report.
Naira appreciated against the greenback at the Parallel market by 19.98% to close at N605.00 per dollar on Friday, according to channel checks. At the Interbank Foreign Exchange market, the exchange rate closed flat at N430.00 amid the Central Bank of Nigeria’s weekly injections of $210 million.
Of the sum, $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles. Meanwhile, traders indicate that the exchange rate went in mixed directions across the foreign exchange forward contracts.
Specifically, 2 month, 3 months and 12 months contracts gained 0.05%, 0.05% and 0.18% to close at N420.92, N423.80 and N448.02 per greenback respectively. However, 1 months and 6 months contracts lost 00.11% and 0.01% to close at N418.46 and N432.66 per the United States dollar respectively.
“We expect some level of pressure on the Naira against the dollar due to anticipated pressure on foreign exchange amid electioneering activity coupled with weak petrodollar earnings”, Cowry Asset said in a note. #Naira Holds Strong at Official Window, Parallel Market
