Naira Trades Sideways, Interbank FX Turnover Slides by 38%
The naira traded sideways at the Nigerian foreign exchange market (NFEM) on Monday, with data signalling a decline in interbank FX turnover despite a rising deal count.
Data released by the Central Bank of Nigeria (CBN) revealed that the official exchange rate closed at N1326.3014 per US dollar, relatively stable versus N1,362.5192 quoted at the close of the trading session last week.
The spot FX rates hovered between N1324 and N1331 per US dollar during the day, relatively stable with the rates quoted in the equivalent period on Friday.
Financial institutions’ activities at the interbank FX window increased to 109, but NFEM interbank FX turnover moderated by about 38% to $95.611 million on Monday from $148.848 million on Friday.
The official rate strengthened from N1,368.22 per dollar at the end of July to N1,332.94/$ at the end of August, representing a 2.58% appreciation, AIICO Capital Limited said in a report.
The move was persistent, with the naira strengthening through most of the second half of the month and reaching its strongest level since the beginning of the year.
This coincided with a sharp improvement in FX market activity; NAFEM turnover rose to $5.05 billion in the week ended August 21, up 146.1% week-on-week, while total turnover had reached $1.41 billion on August 17 alone
FX analysts expect the naira to maintain its appreciation bias in September, with the official exchange rate likely to test the N1,300/$ level as strengthening external reserves and improved FX market liquidity continue to support supply.
However, analysts said the widening gap with the parallel market suggests that appreciation may be less pronounced outside the official market, while a resurgence in corporate and importer demand could limit further gains Top 5 Stocks with Buy Recommendations from Broadstreet
