Following a moderation in demand pressure, amid a decline in the supply of dollars, the naira is expected to stabilise further this week.
The foreign exchange (FX) market concluded on a positive note last week as across official and parallel markets, the naira appreciated against the dollar.
The naira according to the data compiled from the FMDQ Securities Exchange, gained 0.95 percent as the dollar was quoted at N1,602.75 on Friday, stronger than N1,617.96 quoted on Monday, the beginning of the trading week, at the official FX market.
Data collated from different traders and various trading platforms also indicated that at the parallel market, the local currency closed the trading week flat by 0.31 percent to t N1,605 on Friday as against N1,610 on Monday.
The dollar supplied by FX market players eased by 20.99 percent to $848.14 million on Friday as against $1,073.50 million which was recorded on Monday of the same week.
Apparently, the pressure on the naira/dollar exchange rate abated last week as the nation’s external reserves sustained increase in one month.
According to Data from the Central Bank of Nigeria (CBN), the foreign currency reserves rose from $33.17 recorded at the beginning of February 2024 to $34.37 billion as of March 12, 2024; a 3.62 percent increase.
On a daily trading basis, data from the FMDQ also indicated that the naira closed flat on Friday at 1,602.75 per dollar, representing 0.39 percent stronger than 1,608.98/$1 on Thursday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The intraday high closed at N1,615.50 per dollar on Friday, stronger than N1,625 quoted on Thursday on the spot. Also, the intraday low appreciated to N1,524.99 on Friday, stronger than N1,576 quoted on Thursday.
The daily FX market turnover declined by 43.59 percent to $137.43 million on Friday compared to $243.65 recorded on Thursday.
At the parallel market, also known as the black market, naira steadied at 1,605 per dollar on Friday.
According to a report by Afrinvest Securities Limited, the CBN’s forex reserves appreciated 0.9 percent week-on-week (w/w) to $34.4bn (as of 14/03/2024). Meanwhile, activity level in the NAFEM window decreased 37.4 percent w/w to $1.0bn.
“In the currency market, the Naira strengthened against the USD at both the official and parallel windows. At the official window, the Naira gained 1.5 percent w/w against the USD to close at N1,602.75/$1.00, while at the parallel market, the pair closed at 81,595.00/ $1.00, indicating a 31bps gain. Analysts at Afrinvest said, “we expect rates across FX segments of the market to follow a similar trend barring any new developments”
In addition to this, the Central Bank had indicated that there has been an increase in FX inflow and foreign reserves through the past month.
The CBN Acting director of corporate communications, Mrs Hakama Sidi Ali disclosed this in a statement where she attributed the significant increase in fx inflow to remittance payments and Foreign portfolio investors.
The statement partly reads: “The Central Bank of Nigeria reported a significant increase in foreign exchange inflow into the economy in February 2024, with marked increments in remittance payments by Nigerians overseas and purchases of naira assets by foreign portfolio investors. “The bank’s data indicates that overseas remittances rose to $1.3 billion in February 2024, more than four times the $300 million received in January.
“Foreign investors purchased more than $1 billion of Nigerian assets last month, with total portfolio flows of at least $2.3 billion recorded thus far in 2024 compared to $3.9 billion seen in total for last year.
