The difference between the exchange rates of the Nigerian naira in the exporters’ window, investors’ window, and parallel market printed lower at N278 per US dollar. Earlier in the year, when the parallel market rate soared to almost N790, the FX spread had printed above N300 on each US dollar, providing speculative opportunities.
The naira gained $1.75 to settle at N462.25 at the investors’ window on Monday as demand from the Central Bank of Nigeria’s FX auction helped to bolster the supply side.
The apex bank’s secondary market intervention sales last week saw it selling dollars to market players. As a result, there were less demand pressures in the underground market where the naira freely trades for undetectable currency needs.
According to a channel check by MarketForces Africa, Bureau de Change (BDC) owners sold US dollars for N740 in the open market yesterday. According to analysts, the exchange rate has been on the upswing in anticipation of an anticipated rise in the demand for foreign exchange in the black market.
Remember that local banks informed their clients of a 50% cut in business/personal trip reimbursements as an apex bank ration FX for qualified demand. comparing the two exchange rates on the market. The FX gap printed at N277.75, attaining a convergence of more than 7%.
Analysts still believe there is room for economic speculation at the current level. Without comprehensive reforms to exchange rate management and steady inflows of US dollars into the local economy, the Naira is more likely to depreciate in value in 2023, according to analysts’ consensus.
The Nigerian autonomous exchange rate (NAFEX) last week fluctuated between N460.0 and N466.0 per US dollar, but it ended the week at N464. On the futures market, foreign exchange rates fluctuated between N462.0 and 507.1. The naira lost 0.5% in the 1-month contract, closing at N469.2 on a weekly basis. Naira fell 11% when banks released a fresh update on foreign exchange spending.
Similar trends were observed for lengthier contracts, as the 3-month FX rate fell 0.5% on Friday to settle at N485.9. On the same day that the naira depreciated to N464, the foreign exchange spot rate in the retail secondary market intervention sales (SMIS) market closed unchanged at N462.
In a market brief, Coronation Research estimated the gap between the NAFEX and parallel market rate at 59.9%. According to data from FMDQ, NAFEX turnover declined by -12.2% week on week to $359.6 million.
Analysts said the NAFEX window recorded an inflow of US$210.5 million. Of the sum. CBN accounted for 2.8%, foreign portfolios investors 9.9%, non-bank corporates 52.8%, exporters 27.7%, and others accounting for 6.8%.
