Naira Slides, Data Shows FX Inflows Reach $871mn
The naira slid against the US dollar in the foreign exchange (FX) market on Tuesday due to slight liquidity pressures.
The FMDQ FX rate depreciated by 0.22% to N1,498.95 per greenback, marking a second depreciation this week after a strong rally in January.
FX amount on the supply side has remained strong, supported by inflows from international oil companies and foreign portfolio investors and exporters’ inflows.
Last week, more than 871 million US dollars liqudity stemmed the tide against the naira in the official market. Due to improved confidence, market analysts expect FX inflows to keep the naira movement on a positive trajectory.
In the parallel market, the naira appreciated against the dollar following the Central Bank’s decision to extend the temporary FX sales deadline for Bureau de Change operators.
The currency operators in the informal currency segment are allowed to buy $25,000 from local banks at the official rate to keep the supply side strong for invisible payments.
A channel check conducted by CardinalStone Limited revealed that the naira appreciated by 0.31% to N1,605 per US dollar. This brought gap between the official and parallel markets to N107.
Last week, the Nigerian autonomous foreign exchange market window recorded an inflow of US$871.30 million. In a note, Coronation Research said the CBN accounted for 9.97% of the total inflow.
Other contributors include foreign portfolio investors FPIs (32.12%), non-bank corporates (32.95%), and exporters (24.20)%, while other sources accounted for 0.76%. #Naira Slides, Data Shows FX Inflows Reach $871mn
