On Friday, the nation’s currency, the naira, closed unchanged at N428.12/$, following a drop in dollar liquidity at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market.
Activities remained low as the daily foreign exchange market turnover declined by 34.75 percent to $71.92 million on Friday compared to $110.22 million recorded on Thursday, data from the FMDQ indicated.
After trading on Friday, the dollar was quoted at the rate of N428.12/$ the same rate quoted on Thursday at the official market.
Most currency dealers who participated at the FX auction maintained bids between N416.00 (low) and N444.00 (high) per dollar.
At the parallel market popularly called the black market, the local currency further depreciated as demand increased. Consequently, naira closed at N660 per dollar on Saturday losing N5 over N655 closed on Thursday.
Week-on-week, Naira appreciated by N0.87 (+0.20%) w/w against the dollar from last week’s close of N429/USD to N428.13/USD at the I&E FX segment, according to a report by Cowry Asset Management Limited.
Also at the parallel market segment, the earliest pressure exerted on the local currency from last week eased as the Naira appreciated by 7.69 percent w/w or N55 to close at N660/USD from N715/USD last week.
Read also: Manufacturers pay most taxes but infrastructural neglect limits potentials
At the interbank foreign exchange market, NGN/USD closed flat at N430.00/USD amid weekly injections of USD210 million by the Central Bank of Nigeria (CBN).
A breakdown of the FX disbursement shows that USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for Invisibles, the report noted.
“This week, we expect the Naira to trade in a similar band against the greenback barring any significant market distortions as the CBN continues its weekly FX market interventions”, analysts at Cowry Assets said.
Last week, Brent crude oil prices fell 9.1 percent w/w to $94.56/bbl., as concerns over a possible recession and a fall in oil demand rattled markets. Meanwhile, external reserves further declined, down 0.4 percent ($173.7m) to $39.1bn (8/3/2022) from $39.2bn last week. The prospect for accretion in reserves remains weak as oil production stagnates, a report by Afrinvest Securities Limited stated.
At the FMDQ Securities Exchange (SE) foreign exchange contract market, the total value of open contracts of the naira settled at $3.9 billion, up $89.5 million, which was 2.4 percent increase over $3.8 billion opened the previous week, the report noted.
“We expect rates to trade within a tight band across the different FX segments of the market, analysts at Afrinvest said.
