US Dollar Inflow into Nigerian FX Market Sinks Further
US dollar volume, or FX inflow, into the Nigerian currency market dropped further last week, down by about 24% to close at $512.20, according to an update released by Coronation Merchant Bank Limited.
US dollar inflows into the official foreign exchange market have remained on the decline week on week as foreign portfolio investment and exporter’s flows weakened.
Last week, FX inflows into the currency market fell by 24% and the same falling spree was recorded last week, a situation that weakened the naira exchange rate and forced the Central Bank to intervene.
According to Coronation Merchant Bank research subsidiary, Foreign exchange inflows through the Nigerian Foreign Exchange Market (NFEM) moderated to US$512.20 million, compared with US$672.30 million in the previous week.
Total inflows had peaked at $1.37 billion in November, supported by offshore investors seeking to boost their portfolio holding in Nigerian market but maintain downward trend week on week.
The breakdown of last week FX inflows showed that Foreign Portfolio Investors (FPIs) accounted for the largest share of inflows at 38.77% or US$198.57 million of the total sum.
The firm reported that Exporters contributed 32.90% of the FX total, Nonbank Corporates (14.89%), Individuals (9.68%), while other contributors accounted for 3.76%.
Last week, the Naira weakened across the official and parallel market segments. At the official window, the currency depreciated by 0.98% w/w to close at N1,456.72/US$1.
Similarly, the parallel market rate shed 1.02% w/w to settle at N1,465.00/US$1. Consequently, the premium between the two markets widened slightly to N8.28/US$1,from N7.57/US$1 in the prior week.
“We expect the exchange rate to remain within a similar band below the N1,500/US$1 level, supported by steady liquidity conditions and CBN interventions,” Coronation said. Naira: $250m FX Injections Redirect Exchange Rate
