Naira Steadies as FX Transactions Fall by 21%

Naira Steadies as FX Transactions Fall by 21%

Following moderate demand pressures, the Nigerian naira steadies on at N461.67 per the United States (US) dollar in the Investors and Exporters foreign exchange (FX) market.

The rate became steady after market data shows that the dollar volume transacted at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) market declined by about 21%, according to market data.

For 2023, there are downsides to the exchange rate, and the possible upside potential is lacking strongly due to foreign currency scarcity in the local economy. However, the shortage of hot monies has helped position financial market in a much better way.

Though, there is a possibility that foreign receipts will improve in the coming days as Nigeria ramps up crude oil production to 1.44 million barrels per day in December, according to OPEC data.

However, dollar demand for pre-election spending and invincible payments is expected to peak in the first quarter, settling a rude outing for exchange projection among FX analysts sampled by MarketForces Africa.

Channel checks show that the Naira fell by 0.13% to N743 from N742. FX market analysts still hope to see a fresh devaluation of the local currency which they believe is trading above its fair value at the NAFEX market.

Late week, the NAFEX rate traded within the range of N425.0-462 but closed at N461.7 per dollar on Friday. This points towards a depreciation of -0.04% or N0.2 In the forwards market, the naira traded within the range of N461.0-477.7.

In the 1-month contract, the spot rate depreciated by -0.5% to close at N470.40; in the 3- month contract, FX appreciated by +0.1% to close at N479.5 at weekend.

In the retail secondary market intervention sales (SMIS) market, the FX spot rate remained unchanged at N445 PER United States dollar on Friday. >>>Naira Steadies as Banks Issue Update on FX Purchase

At an open market rate of N731 last week, the gap between the NAFEX and the parallel market rate is 58.3%.  Citing data from FMDQ, Coronation Research said NAFEX turnover declined by 20.9% to USD 590.2 million. 

Analysts noted that the NAFEX window recorded an inflow of USD256 million with the CBN accounting for 4.8%, FPIs accounting for 2.3%, non-bank corporates accounting for 16.9%, exporters accounting for 69.2%, and others accounting for 6.8%. # Naira Steadies as FX Transactions Fall by 21%

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