The foreign exchange market closed on Friday with Nigeria’s currency depreciating across official and unofficial segments despite the injection of $210 million by the Central Bank of Nigeria (CBN).
Naira weakened by 0.15 percent or N0.62k to close at N411.75k per dollar on Friday compared to the opening rate of N411.13k/$ on Monday at the Investors and Exporters (I&E) forex window, data compiled by BusinessDay from the FMDQ indicated.
The Naira/dollar exchange rate closed at N411.45k on Tuesday, which was N0.32k lower than N411.13/$ closed on Monday at the same market.
It steadied at N411.45k per dollar on Wednesday before gaining N0.20k to close at N411.25k on Thursday.
At the parallel market, Naira closed the week, depreciating by 0.39 percent as the market closed at N505 per dollar on Friday compared to N503/$, the opening rate.
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Naira closed flat at N500 per dollar at the Bureau De Change (BDC) segment of the foreign exchange market.
The market witnessed low liquidity as the daily market turnover increased by 3.41 percent to close the week at $73.99 million on Friday from the opening turnover of $71.55 million.
NGN/USD exchange rate closed flat at N380.69/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by CBN into the forex market, according to a report by Cowry Asset Management Limited.
A breakdown of the disbursement showed 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.
Naira/USD exchange rate appreciated for most of the foreign exchange forward contracts: 2 months, 3 months, 6 months and 12 months exchange rates fell by 0.15%, 0.11%, 0.09% and 0.05% to close at N415.54/USD, N417.65/USD, N423.69/USD and N435.54/USD respectively. However, the 1-month rate depreciated by 0.02% to N413.52/USD while the spot rate remained at N379.00/USD.
“In the new week, we expect Naira to weaken against the greenback at most FX Windows as CBN’s capacity to defend the Naira weakens amid plunging external reserves,” analysts at Cowry Asset Management said.
Muda Yusuf, immediate past director general of the Lagos Chamber of Commerce and Industry (LCCI), within the week urged the Nigerian authorities to create an enabling environment that will encourage export business and attract foreign exchange (forex).
The Nigerian economy, according to him, has the capacity to attract a lot of foreign exchange because of its size, stressing that there are potentials and opportunities that are still hidden.
He said the policy of exchanging export proceeds at the Nigerian Autonomous Foreign Exchange (NAFEX) rate is not fair to the exporters because of the gap between the official and unofficial exchange rate windows.
“Exporters should have free access to their export proceeds and be incentivised, just like the Nigerian diaspora were encouraged with the Central Bank of Nigeria’s naira 4 dollar exchange rate policy for remittances,” he said.
At the money market, the Overnight (O/N) rate increased by 8.75 percent to close at 20.50 percent on Friday as against the last close of 11.75 percent on Thursday, and the Open Buy Back (OBB) rate increased by 8.50 percent to close at 19.75 percent compared to 11.25 percent on the previous day. Money market rates increased by an average of 863 bps following the FX retail auction by the CBN, according to FSDH Research.
