Naira gains further on low demand

Naira on Tuesday appreciated further against the dollar, gaining 0.90 percent as low demand for the greenback is being witnessed at the parallel market popularly called the black market.

During the morning session on Tuesday, dollars was quoted at an average rate of N832.50/$ compared to an average of N840 quoted on the previous day, across the South and Northern region.

In Lagos Street market, dollars exchanged at between N830 and N835/$, while in Kano, it was quoted at between N825 and N830 per dollar.

“Dollar is coming down again. In fact we are not even sure of the next rate and people are not buying”, one trader told BusinessDay.

At the parallel market, rates closed at N895.00/ $1.00, depreciating N130.00 week-on-week (w/w), according to a report by Afrinvest Securities Limited.

Activity level in the Investors and Exporters (I&E) forex window inched higher by 5.3 percent w/w to $389.0m from $369.3m in the previous week.

Read also: Naira gains on increased dollar supply

Naira remained unchanged at N445.50 per dollar on Monday at the I&E window, also called the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX). Most currency dealers who participated at the auction on Monday maintained bids between N439.98 (low) and N461.00 (high) per dollar.

The daily foreign exchange market turnover increased by 119.25 percent to $206.25 million on Monday from $94.07 million recorded on Friday, data from the FMDQ indicated.

“The Naira is grossly overvalued in the official market,” said Bismarck Rewane, managing director/chief executive officer of Financial Derivatives Company Limited.

He said Naira is 20 percent overvalued, and that the redesign of the currency notes is no solution to overvaluation.

According to him, Nigeria’s balance of trade is under pressure, and the forex market structure is inefficient.

Nigeria’s Central Bank last week announced plans to introduce new banknotes to replace the current N200, N500 and N1,000 Notes with effect from December 15, 2022.