Tuesday saw a further decline in naira exchange rates across all forex markets as the central bank remained unmoved by the two-week decline in the value of the local currency. During the formal timeframe for qualified FX demand, the exchange rate deteriorated.
Simultaneous demand pressure was also observed in the unofficial currency market. Even if the value of the naira has declined further in both markets recently, it seems that this has almost brought the markets together.
The official Nigerian autonomous foreign exchange market saw a 0.03% decline in the value of the naira versus the US dollar, with the currency ending at ₦1,509.45. This information is based on FMDQ spot FX rate data. The naira finished at N1,508 per US dollar on the parallel market as a result of growing demand for covert transactions.
Last week, the NAFEM rate traded within the range of N1,401- N1,577, closing at N1,505.3 in the spot market on Friday. MarketForces Africa reported that the exchange rate weakened by -1.3%, or N19.80 kobo amidst the FX liquidity crisis at the weekend.
The exchange rate movement, however, narrowed the gap between the NAFEM and the parallel market rate to less than N2 on the US dollar. According to data from FMDQ, the total volume of US dollars in the official window increased by +57.8%, or USD378.4 million, to close at USD1 billion on Friday.
In its market note, Coronation Research said the NAFEM window recorded an inflow of USD 336.4 million last week. However, there was no inflow from the CBN for the third consecutive week.
The firm said foreign portfolio investors (FPIs) accounted for 17.3% of US dollar volume, non-bank corporates contributed 36.5% to the FX supply in addition to 39% US dollar volume from exporters, while others FX sources accounted for 7.3%.
External reserves continue to climb amidst rising crude oil prices in the global commodity market. Today, oil prices increased again. Brent crude rose by 0.26% to $86.82 per barrel, and WTI crude advanced by 0.15% to reach $83.50 per barrel.
