Naira Steady at Investors Window on Stable Dollar Supply
The Nigerian local currency, Naira, maintains a steady position amidst stable dollar supply into the Investors and Exporters window which douse any potential pressure.
However, the total volume of the United States dollar traded at investors and exporters window dropped by 38.7% at the just concluded week, analysts’ reports show.
Though naira steadied against the greenback at the window as well as in the parallel due to new dynamics in the foreign exchange management. Analysts are predicting that Naira would remain strong for the rest of 2021 due to the expectation of dollar inflows from oil, SDR and proposed Eurobonds issuance.
Nigeria’s FX reserves closed higher for the third consecutive week, as the gross reserves position increased by US$137.23 million to US33.54 billion last week. The CBN decision to narrow operations of the bureau de change is also curbing currency speculation to the extent of the supply capacity.
In the foreign exchange market, pressure on naira has eased though some analysts still remain sceptical about BDCs cutoff in the exchange rate management.
At the weekend, the naira stayed flat at N411.50 a dollar at the Investors and Exporters Window (IEW) but appreciated by 1.4% to N510.00 to a dollar in the parallel market.
In a new report, CardinalStone Partners expects foreign exchange to converge in the coming months, as analysts predicted that the spread between the official and parallel markets would narrow.
At the Investors and Exporters window, analysts at Cordros Capital said total turnover decreased by 37.8% week to date to US$489.19 million.
However, trades were consummated within the N400.00 – N427.95 band.
In the forwards market, the exchange rate also appreciated across the 1-month (+0.3% to N413.70/USD) and 3-month (+0.5% to NGN417.79/USD), 6-month (+0.5% to N424.01/USD) and 1-year (0.3% to N436.43/USD) contracts.
“We expect improved liquidity in the Investors and Exporters window over the medium term, given our expectation of increased oil inflows in line with the rise in crude oil prices, and inflows from foreign currency borrowings (US$6.20 billion) and IMF SDR (USD3.40 billion)”.
Accordingly, analysts said they expect the naira to remain relatively range-bound between N410.00 – NGN415.00 a dollar at the Investors and Exporters window in the new week.
Meanwhile, the exchange rate closed flat at N380.69 a dollar at the Interbank Foreign Exchange market amid weekly injections of US$210 million by CBN into the forex market.
Read Also: T-Bill Rate Steady as Naira Gains at Investors Window
A total sum of US$100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), US$55 million was allocated to Small and Medium Scale Enterprises and US$55 million was sold for invisible.
Naira Steady at Investors Window on Stable Dollar Supply
