Naira stabilises across markets as overnight inter-bank rates hit 78.5%

The nation’s currency, the naira, on Tuesday stabilised across foreign exchange markets in Lagos, BusinessDay findings revealed.

A breakdown of the stability of the naira shows that at the parallel market and bureau de change (BDC) segment of the foreign exchange market, the local currency gained N2.00k against the US dollar, representing 0.97 percent appreciation.

After trading on Tuesday, naira closed at N203/$ as against N205/$ the previous day at the parallel market while it closed at N205/$ compared to N207 the previous day at the BDC segment.

At the inter-bank market, the local currency closed at N199.17/$ from N199.15/$ the previous day, according to data obtained from the Financial Markets Dealers Quotations (FMDQ). However, this represents slight depreciation of 0.01 percent but analysts believe that this cannot be regarded as depreciation but shows stability.

Meanwhile, portfolio inflows to Nigeria jumped since last month’s presidential election, easing pressure on the currency of Africa’s biggest oil producer, Bloomberg reports.

The report quoted Emmanuel Ukeje, director of financial markets in Abuja at the Central Bank of Nigeria, as saying “There is more confidence that the economy will grow as the outlook of foreign investors is very upbeat”.

“It is expected that the pressure on the naira will abate following the peaceful conclusion of elections,” Ukeje said. “Although other contending factors like low oil prices in the international market still affect the availability of foreign exchange, the pressure should now reduce.”

The naira on Monday rose less than 0.1 percent to 199.05 at 4:12 p.m. in Lagos. The central bank has been trying to bolster the currency since last year by limiting foreign-exchange trading and selling down its foreign reserves. The reserves stood at $29.6 billion on April 9, central bank data show. That’s the lowest in at least a decade, according to HSBC Holdings Plc.

“Our future responses would be premised on our judgment of where things stand in these markets vis-a-vis our objective of maintaining stability,” Ukeje said. “The bank is currently satisfied with the interventions at the inter-bank market and the stability in the foreign exchange market.”