According to market statistics, the naira, the indigenous currency of Nigeria, declined at the Investors and Exporters foreign exchange (FX) window at the start of the year.
The decrease followed a report from the Central Bank of Nigeria (CBN) stating that the foreign reserve position fell by $3.45 billion in 2022 due to growing import bill payments. Nigeria’s gross foreign reserves, which printed at $37 billion on Friday, have been trending below the $40 billion threshold since early February 2022, when they printed at $40.01 billion.
Although researchers contend that the apex bank’s intervention temperature decreased at the same time as foreign investors withheld their support for the local economy, the naira lost roughly 11% of its value in 2022.
While some multinational corporations struggle to upstream dollars offshore, increasing the FX backlog, the CBN maintains strict foreign currency restrictions to keep the naira stable on the foreign exchange market.
As a result, Nigerian banks sent letters to their clients informing them of the decision to suspend the $20 minimum spend requirement for debit card purchases and informing them that it would take 60 days to process FX for payments of overseas school tuition.
Due to the anticipated rise in demand and opening of import channels, including election expenditure, the demand for foreign currency has been forecast to increase in the first quarter of 2023.
The Naira fell by N0.17 or 0.04% week over week in the foreign exchange market for investors and exporters to close at N461.67 from N461.50 in the previous week.
Nigeria’s foreign exchange reserve continued to grow as it closed the day with a gross reserve position of $37.15 billion, up $70.13 million. >>> Bonds in Nigeria remain steady as Treasury Bill yields drop below 4%.
With trades completed within the range of N425.00 to N477.67 on Thursday at the close, the overall turnover at the investors’ window decreased by 43.5% to $290.93 million, reflecting activity levels.
The Naira dropped 0.68% or N5 week over week to reach N742 from N737 last week as the exchange rate deteriorated at the window of the parallel market. Forex market players reportedly kept their bids at between N465 and N470 in the Investors and Exporters section, according to currency dealers.
In the Forwards market, the naira depreciated 0.5% at the 1-month to N470.35 and 1-year rate drop 0.2% to N530.67 per contracts while 3-month contract appreciated 0.1% to N479.54. Meanwhile, the naira was flat at N497.58 for 6-month contract.
