The Naira, the indigenous currency of Nigeria, started the week off on a fairly even keel as prices at the Investors’ and Exporters’ foreign exchange window, where rates are being unified, closed at 464.5 per US dollar.
In his inauguration address, Nigeria’s new president, Bola Tinubu, unveiled a strategy to harmonize the country’s several foreign exchange rates. If adopted, the measure would be in line with requests from the World Bank and IMF for the monetary authority to adopt a market clearing rate to encourage foreign currency inflows into Nigeria.
According to Broadstreet analysts, confused exchange rates and a growing backlog of foreign cash for repatriation are to blame for the lack of interest among international investors.
The top bank introduced a number of rates to manage exposures in the face of FX shortage brought on by a decline in US dollar inflows. The Central Bank of Nigeria (CBN), which is working to bolster its buffer, has implemented capital restriction to minimize FX outflow that would have a negative influence on the value of the naira.
The apex bank continues to strengthen the naira by secondary market intervention sales despite a poor supply side. The CBN has been returning rejected bids and even delaying transactions, according to the FX sales record.
The naira exchange rate increased slightly on the black market to N756 per US dollar as traders started to keep an eye out for potential currency reforms in the nation.
Data from FMDQ Exchange showed that the local currency appreciated against the dollar on Tuesday, exchanging for N464.50 at the Investors’ and Exporters’ window compared with the N464.51 to the dollar at the close of business on May 26.
The open indicative rate closed at N464.10 to the dollar on Tuesday. An exchange rate of N467 to the dollar was the highest rate recorded within Tuesday’s trading before it settled at N464.50.
The naira sold for as low as 460 to the dollar within the day’s trading. A total of 120.36 million dollars was traded at the official Investors and Exporters window on Tuesday. > Naira Steadies as Banks Issue Update on FX Purchase
According to analysts quoted in a research by Coronation Research, the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate fluctuated between N410 and N632 per US dollar but ended at N464.5.
This suggests a weekly devaluation of N1.5 or -0.3%. The range of FX prices transacted in the futures market was N449.9-483.2. The naira increased by +1.5 to settle at N470.8 in the 1-month contract, and by +4.3% in the 3-month contract to close at N485.8.
On Friday, the FX spot rate in the retail secondary market intervention sales (SMIS) market closed at N462 per dollar. FMDQ records show that NAFEX turnover climbed by 8.7% on Friday to reach US$702 million.