The Naira, the indigenous currency of Nigeria, saw a dip for the first time in many weeks due to a significant decrease in FX turnover at the Nigerian autonomous foreign exchange market. The country’s gross external reserves experienced a sharp fall prior to the issue of foreign currency bonds by the government during the year’s second quarter.
The naira declined by 1.1% to N1,148 per US dollar on Tuesday following several rallies, as reported by FMDQ Securities Exchange. The previous high was N1,136.04 per greenback.
Due to increased trust in the central bank’s capacity to maintain the current FX reform and better foreign currency supply, exchange rates have experienced a substantial rebound across all forex markets.
The official rate last week moved between N1,100 and N1,281.0, but it ended the week at N1,142.4 in the spot market, according to Coronation Research in its latest update – pointing towards an appreciation of +8.7% or N108.7.
In the forwards market, exchange rate was within the range of N1,235.0– N1,518.7. In the 1-month forward contract, the naira appreciated by +5.1 over the week to close at N1,212.8. Also, 3-month forward contract appreciated by +4.1% to close at N1,248.9 on Friday.
Citing data from FMDQ, analysts explained that total NAFEM turnover decreased by -35.3% or USD324.4 million to close at USD594.9 million on Friday.
Currency traders said the NAFEM window recorded an inflow of USD427.2 million. Though naira recorded steadied gains, there was no inflow from the Central Bank. Naira to Appreciate to N1200 vs US Dollar -Goldman Sachs
Foreign Portfolio Investors (FPIs) accounted for 39.7% of the total inflows, followed by 31.3% inflows from non-bank corporates in addition to 24.6% from exporters while others accounted for 4.4%.
Nigeria’s external reserves decreased by -2.5% to close at USD32.6 billion on Friday. Latest data from the apex bank showed the gross external reserve has dropped to $32.29 billion.
