At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the value of the naira increased by almost 6% as demand for foreign currency outpaced supply. A rise in demand for import payments has heated up the local FX market. Research analysts at LSintelligence Associates stated that there is more to it.
In a letter shared with MarketForces Africa, the business noted, “Spurious demand emanating from speculative activities affects exchange rate.” There have been rumors that the government might neutralize the effects of the parallel market on the exchange rate by taking harsh measures.
MarketForces Africa was informed by sources that there is a proposal to end middlemen’s operations in the FX market. The open market exchange rate has gotten worse even after the Central Bank of Nigeria (CBN) declared decision to lift restriction of 43 items banned in 2015.
Data from FMDQ review showed that the Naira edged the greenback by 5.51% at the organised FX market, closing at N801.10 to the dollar from N847.77 per dollar the previous day.
Cowry Asset managers resurgence to ease in demand pressure and FAAC inflow into that hit the system. On the contrary, in the parallel market, the Naira took further beating on Wednesday.
Open market exchange rates dropped by 2.77% as demand pressure continues to bite harder on the back of little or no dollar supply, closing at a new low of N1,300 against the US dollar.
The commodities market continues to face bearish situation. This keep Nigerian External Reserves tight despite improved production volume toward meeting the Organisation of Petroleum Exporting Countries quota of 1.78 million barrel per day.
Global benchmark Brent crude traded at $ 87.97 per barrel, down by 0.11% from the closing price of $88.07 a barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $ 83.50 per barrel, down 0.28% from Tuesday’s close of $83.74 per barrel.
MarketForces Africa reported that crude oil prices dropped on Tuesday, giving up nearly half of the gains made since the Hamas attack on Israel as the short-term risk premium somewhat diminished.
Brent prices settled at around US$88 as the risk premium diminished yesterday as the demand outlook remains unimpressive.
