At the investors’ and exporters’ foreign exchange window, an official venue for manufacturing companies, the Nigerian currency, the Naira, fell to N446.38. In the parallel market, the exchange rate fell to N745 as year-end demand for foreign dollars increased.
On Tuesday, the open indicative rate in the investors’ window ended at N445.40 to the dollar. The highest rate reported throughout the day’s trade was N452 to the dollar before it finished at N446.38.
During the day’s trade, the naira fell as low as 440 to the dollar. On Tuesday, N72.15 million was exchanged at the official Investors and Exporters window. The difference has now expanded between the Nigeria Autonomous Foreign Exchange Fixing (NAFEX) and the Nigerian Central Bank and the parallel market rate to about 70%.
A sloppy exchange rate has impacted production costs across important industries, and corporations are recording FX losses in their books as a result of self-repricing in the FX market, while foreign reserves fall.
According to the Central Bank of Nigeria, Nigeria’s gross foreign reserve has already fallen below $37 billion, as oil export earnings remain underwhelming. Despite increased volume production, crude oil prices have recently fallen due to an economic crisis in major oil-consuming countries, particularly China.
The naira fell 0.1% to N446.38 in the official window on Tuesday, as the market slipped into a state of disequilibrium between demand and supply of foreign currencies. The Nigeria autonomous foreign exchange fixing (NAFEX) rate fluctuated within the range of N426.0-452.0 but eventually closed at N446.5.
This translates to a 0.3% devaluation of the naira at the market level when compared with its previous trade position. In the forwards market, FX traded within the range of N447.0-462.7. >>> “Each dollar slump in Oil price cost Nigeria N20 Billion daily”
In the 1-month contract, the naira appreciated moderately to N460 and in the 3-month contract, gained +0.4% to close at N469.9. In the retail secondary market intervention sales (SMIS) market, the FX spot rate remained unchanged at N445.
The parallel market rate has remained relatively stable, but there was moderate pressure at the space on Tuesday amidst intermittent exchange rate movements. The volume of dollars traded in the official market increased moderately, according to data from FMDQ, up 1.9% to $162.2 million as of Friday.
Analysts said the NAFEX window recorded an inflow of $494 million. Of the sum, CBN accounted for 1.2%, FPIs accounted for 0.4%, non-bank corporates accounted for 28.9%, exporters accounted for 68.4%, and others accounted for 1.1%. # Naira, External Reserves Slump amidst Rising FX Demand
