Naira Trades at N429.05 as Gross External Reserves Rise
At N429.05 to one United States dollar, the Nigerian local currency, Naira, on Friday appreciated against the dollar at the Investors and Exporters foreign exchange window, after holding steady for two days at the official market as external reserves increased.
In the just concluded week, Nigeria recorded the foreign exchange market inched higher after four weeks of drawdown by the apex bank despite moderation in the global price of crude oil in the market.
Unimpressive China’s economic performance and recession fear in developed markets have impacted demand for crude oil, causing prices to fluctuate.
Nigerian local currency has been under pressure as a result of ever rising demand for imports and low receipts while foreign investors are battling the Central Bank of Nigeria’s capital control measures.
MarketForces Africa reports that a slew of currencies traders are of the view that the local currency is still relatively overvalued, thus asking the monetary authority to devalue the naira. Devaluation of the naira is at the top of foreign investors’ requirements to return to the Nigerian economy.
At the official window, the naira was sold at N429.05 for a United States dollar, representing an increase of 0.08 per cent, compared with the N429.38 it exchanged for the greenback on Thursday.
Demand for foreign currencies slowdown as business activities for the week ended but in the parallel market, the exchange rate worsened. Some Bureau de Change operators quoted N685 per higher denominated United States dollar.
In the Investors and Exporters FX window, the open indicative rate closed at N428 to the dollar on Friday. An exchange rate of N444 to the dollar was the highest rate recorded within the day’s trading before it settled at N429.05.
The Naira sold for as low as 416.06 to the dollar within the day’s trading. A total of 50.22 million dollars was traded in foreign exchange at the official Investors and Exporters window on Friday. READ: FX: Naira trades flat as external reserves settle at $33.9 billion
Last week, the apex bank injects $210 million into the FX market. A total sum of $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles
Amidst trade imbalance, Nigeria’s external reserves increased after four weeks of decline, rising by $22.35 million to $38.91 billion, according to data from the Central Bank of Nigeria website.
Amidst speculative trading activities, the local currency declined by 0.6% to N686.00 per dollar at the parallel market. Foreign investors’ participation in the Nigerian equities market is gradually waning despite Nigerian stocks being among the cheapest and relatively attractive stocks in the world.
Nigerian Exchange report showed that the total inflow in equities market transactions by foreign investors further declined by 35.36% to N101.18 billion in July 2022 from N156.52 billion in June 2022. However, it reported that this was a 12.71% year-on-year increase from N89.77 billion transacted in July 2021. #Naira Trades at N429.05 as Gross External Reserves Rise
