The Nigerian naira experienced a remarkable surge against the dominant US dollar, following a substantial decline in its pricing. The market witnessed a substantial influx of foreign currency supply, effectively meeting the demand for imports.
According to data from FMDQ Exchange, the naira exhibited a 4.4% appreciation, reaching N744.07 per US dollar compared to its previous value of N776.90 at the Investors’ and Exporters’ foreign exchange window. Conversely, in the open market, the local currency depreciated slightly, with the Naira falling by 0.36% to N792.5 from N792.
Analysts in the non-deliverable forward market forecasted that the local currency would reach N785 per greenback within a month’s time. They highlighted that exchange rate movements largely depend on the balance between FX demand and the availability of US dollars on the supply side.
Coronation Research provided an update stating that the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate fluctuated between N600-841, ultimately closing at N776.9 per US dollar last week. This indicates a depreciation of -1% or N7.7 over the course of the five-day trading session that concluded on Friday. In the forwards market, FX ranged from N751-824.
In the 1-month contract, the naira exchange rate experienced a marginal depreciation of -0.05%, closing at N801.2. Similarly, in the 3-month contract, the FX rate depreciated by -0.04%, closing at N820.2 per US dollar request.
Meanwhile, in the parallel market, the Naira maintained an average rate of N785, resulting in a 1% disparity between the NAFEX and the parallel market rate.
Data from the FMDQ platform revealed a 4.5% decrease in NAFEX turnover, amounting to USD 440.65 million last week. Within this sum, the Central Bank of Nigeria (CBN) accounted for 3.3%, foreign portfolio investors (FPIs) accounted for 8.4%, non-bank corporates accounted for 32.5%, exporters accounted for 49.5%, while other entities accounted for 6.3%.
In anticipation of the repayment of a $500 million maturing Eurobond, Nigeria’s external reserves experienced a slight decline of -0.2% or USD60.27 million, reaching USD34.1 billion, despite the surge in global oil prices.
Yesterday, Brent crude saw a 0.19% increase, reaching $78.32 per barrel, while WTI crude gained 0.46%, reaching $73.52 per barrel. However, oil futures experienced a decline on Monday as traders assessed deflation concerns in China, the top oil importer.
