Naira Opens Weak, Foreign Investors Drive $0.93bn FX Inflows
The naira opens Monday’s trading session on a weak note following mild depreciation at the Nigerian foreign exchange market (NFEM) last week.
The local currency depreciated at the NFEM window last week due to tight US dollar liquidity, declining by 0.12% week on week to close at N1,363.83 per dollar, down from N1,362.21 in the previous week.
The Naira, however, recorded gains midweek, trading around N1,360.55/US$1, before giving up part of those gains toward the end of the week.
Similarly, in the parallel market, the currency weakened by 0.36% week on week to N1,405 per US dollar from N1,400 in the previous week, the research subsidiary of Coronation Merchant Bank said in a note.
The exchange rate movements then, the parallel market premium widened to 3.02% from 2.77% in the previous week amidst growing external reserves.
Nigeria’s gross foreign exchange reserves increased by US$310.04 million to US$50.43 billion, reflecting continued improvements in the country’s external position
The FX market recorded $0.93 billion in total inflows, with foreign portfolio investors (FPIs) contributing the largest share at 54.21% or $0.51 billion.
The breakdown showed that Exporters/Importers contributed 27.11%, or $0.25 billion, and Non-Bank Corporates contributed 12.39%, equivalent to $0.11 billion.
In addition, other Corporates contributed 4.51% ($0.042bn), Individuals contributed 1.42% (%0.013bn), and FDIs contributed 0.34% ($0.003bn), according to Coronation Research.
The merchant bank anticipates that the Naira will trade within a relatively stable range, supported by sustained foreign currency inflows and improving market liquidity. Naira Depreciates as Interbank FX Turnover Declines
