• Friday, June 21, 2024
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Naira gains across market as dollar demand slows

Dollar nears N1,500 as scarcity hits black market

Naira on Monday strengthened across foreign exchange market segments as demand for dollars by the end users moderated.

At the parallel market, popularly called black market, naira appreciated by 0.26 percent as the dollar traded at the rate of N758 on Monday as against N760/$ on Friday.

In April, the naira gained 0.67 percent to close the month at N740/$ from N745/$ at the beginning of the month, according to a monthly report by Financial Derivatives Company (FDC).

The nation’s currency also appreciated by 0.28 percent as the dollar was quoted at N463.50 on Monday from N464.80/$ on Friday at the Investors and Exporters (I&E) forex window, data from the FMDQ indicated.

Most currency dealers who participated at foreign exchange market auction maintained bids between N460.00 (low) and N467.00 (high) per dollar.

Last month, the dollar traded within a band of N462/$-N464/$ at the investors’ and Exporters’ Foreign Exchange window.

This reduced the parallel market premium to N277.88/$ at the end of April from N288/$ at the end of March. The appreciation in the parallel market rate was partly induced by subdued forex demand, the report stated.

The gross external reserves are likely to continue its steady depletion in the near term as major sources of dollar inflows dwindle.

In the month of April, Nigeria’s Foreign exchange reserves maintained its downward trajectory. It fell by 0.45 percent to close the month at $35.25bn on April 28th from $35.41bn at the start of the month.

This was as a result of lower oil prices alongside the decrease in domestic oil production. In April, the price of Brent crude declined by 0.7 percent to $79.31pb from $79.89pb at the end of March while domestic oil production fell by 1.5 percent to 1.35mbpd. The country’s import and payments cover decreased by 0.49 percent to eight months from 8.04 months at the beginning of the month, the FDC report said.

“The further depletion of the reserves will limit the CBN’s ability to intervene in the forex market, which could lead to Naira depreciation. Also, the depletion of external reserves could douse investor confidence as investors become worried about the country’s ability to meet its obligations,” the report stated.