Naira Plunges as Data Shows FX Turnover Dips by 14%
The naira rate plunged against the dominant U.S. dollar in the official wndow as data showed that FX turnover at the Nigerian autonomous foreign exchange market (NAFEM) fell by 14%.
Spot data from the FMDQ platform showed that the naira depreciated by N20, or 1.31%, on the back of renewed demand pressures, closing at N1,545 per US dollar in the official market.
FX transactions conducted on the NAFEM window were consummated between the range of N1,515 and N1,557 per US dollar, AIICO Capital Limited revealed in the note. Citing FX data from FMDQ, Coronation Research revealed that total NAFEM turnover declined by 14.13%, or US$345.20 million, to stand at US$2.10 billion last week.
Further details revealed that the Nigerian autonomous FX window recorded an inflow of US$1.22 billion. Of the amount, the Central Bank of Nigeria (CBN) accounted for 8.07% of the total inflow, FPIs contributed 41.34%, and non-bank corporates supplied 26.29%.
Also, exporters contributed 21.22%, while unidentified categories accounted for 3.1% of total US dollar volume on the supply side. Recent development in the FX market has further revealed that the exchange rate movement is deeply rooted in the old narrative, tight forex liquidity, and surging demand.
But on the electronic trading platform, the naira appreciated against the US dollar after the greenback dominated the demand side in the previous day. FX data from the BMatch system showed that the naira appreciated by 4 bps to N1,548.46 per greenback in the Electronic Foreign Exchange Matching System.
In the global commodity market, the price of oil increased by 1% as market participants anticipated an increase in demand from China, the leading importer of oil, following Beijing’s recent plans to stimulate economic growth.
Brent crude was approximately $72.99 per barrel, and WTI was around $69.40, according to oil data. Similarly, gold gained after an inflation report met expectations, increasing the likelihood of a Federal Reserve rate cut next week. Gold traded at about $2,714.83 per ounce.
Analysts anticipate that geopolitical and macroeconomic factors will continue to influence market sentiment. Investors are awaiting the release of U.S. Producer Price Index (PPI) data for further guidance on monetary policy. #Naira Plunges as Data Shows FX Turnover Dips by 14% Namibia Central Bank Cuts Interest Rate to 7%
