Naira gains 5.06% on dollar supply surge

The naira, on Wednesday, recorded 5.06 percent gain in the official foreign exchange (FX) market following an increase in dollar supply to $221.24 million in one trading day.

After trading, the naira appreciated by 5.06 percent as the dollar was quoted at N1,558.75 compared to N1,637.59 seen on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange Limited.

The dollar supplied by willing buyers and willing sellers increased by 54.55 percent to $221.24 million on Wednesday from N143.15 million recorded on Tuesday at NAFEM.

According to the market summary, the intraday high printed at N1,659.50 per dollar compared to N1,655/$ the previous day. The intraday low closed at N1,540 on the same day as against N1,499 closed on Tuesday.

The local currency steadied at N1,660 per dollar at the parallel market, commonly referred to as the black market.

Last week, the exchange rate gained 0.33 percent to close at N1,593.32/$1 at the NAFEM window, according to a report by Coronation Asset Management. This moderated its year-to-date depreciation to 43.07 percent from 43.25 percent the previous week. Conversely, the Naira declined in the parallel market by 1.80 percent, ending the week at N1,670.00/US$1.There is now a 4.8 percent difference between the two rates.

During the week, the Central Bank of Nigeria (CBN) sold US dollars to Bureau de Change (BDC) operators at a rate of N1,580/$, increasing market liquidity. The goal was to meet the needs of eligible invisible transactions, which included school fees, medical costs, and allowances for personal and business trips.

 Total inflows through the NAFEM window increased to $477.00m (from $403.00m the previous week), largely supported by non-bank corporates. Total outflows also significantly increased to $529.30m (from $370.90m the previous week) due to outflows from non-bank corporates and the exporters/importers window. The CBN published a slight gain of 0.09 percent, or $31.35m in its gross foreign exchange reserves, closing the week at US$36.34 billion.