Naira Trades at N416.67 on Rising External Reserve

Naira Trades at N416.67 on Rising External Reserve

The Nigerian local currency, Naira, was exchanged at N416.67 to a United States dollar at the Investors and Exporters foreign exchange window in the just concluded week amidst a moderate rise in the nation’s foreign reserve.

This week, Nigeria’s external reserve increased by $84.25 million to $39.63 billion, according to data from the Central Bank of Nigeria. Rising import bills and low foreign currencies receipts continue to impact the strength of the Nigerian local currency.

This has necessitated defensive strategies to keep the local currency strong but the goal has not panned out positively as the naira has lost value against the United States dollar.

Amidst the scarcity of foreign currencies in the country, the Central Bank of Nigeria (CBN) hinted that it has started N65 rebate for exporters that repatriate foreign receipts through the official window.

Consequently, demand for the dollar in the parallel market slowdown as Naira further depreciated moderately to N589.50 on Friday from the week’s low spot price of N588. READ: Dollar Trades Stronger Against Major Currencies

At the Investors and Exporters FX window, total turnover or dollar transacted as of 7th April 2022 declined by 23.1% from the beginning of the week to $528.14 million, with trades consummated within the N410.00 – N453.15/$ band, according to Cordros Capital.

Despite higher oil prices, the external reserve has witnessed low foreign currency inflow due to output constraints propelled by weaker investment in oil infrastructure in the past years.

To stem the naira from free-falling, the apex bank has maintained a stance to intervene in the foreign exchange market by making foreign currencies available to balance demand and supply.

In the forwards market, the naira appreciated at the 1-month contract gains 0.1% to N418.00 and 6-months contract recorded a 0.1% gain to N432.61. The 3-months and 1-year contracts contract was flat at N424.02 and N448.85 respectively.

In the week, the CBN injected $210 million into the market. Of the sum, $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS).

Also, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles. #Naira Trades at N416.67 on Rising External Reserve