The foreign exchange market traded for four days against five normal days due to the one-day holiday declared by the Federal Government to mark the nation’s Democracy Day on Monday.
The four trading days ended on Friday with Nigeria’s currency closing strong against the dollar across foreign exchange markets, in spite of low liquidity.
Naira gained 1.38 percent or N7.00k against the dollar as the naira/dollar exchange rate closed at N498 on Friday compared to the N505 opening rate on Tuesday at the parallel market popularly called black market.
Within the week the market witnessed fluctuations in exchange rates across market segments driven by demand and liquidity position.
Naira, which opened at N505 per dollar on Tuesday, strengthened to N502 on Wednesday. It firmed further to between N480 and N485 during intraday trading on Thursday and settled at N493/$ on the same day at the black market.
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At the Bureau De Change (BDC) segment of the foreign exchange market, Naira gained 3 percent or N15 over the dollar as the market closed at N485 per dollar on Friday from the opening rate of N500 on Tuesday.
Trading at the Investors and Exporters (I&E) forex window during the week under review showed Naira gained 0.18 percent or N0.75k against the dollar. The market closed with the dollar being quoted at N411.00k on Friday compared to the opening rate of N411.75k on Tuesday.
At the Nigerian Autonomous Foreign Exchange (NAFEX) Market, the Naira weakened to N412/$ on Wednesday and later strengthened to N411.50k on Thursday, data compiled by BusinessDay from the FMDQ indicated.
Week-on-week, Naira depreciated by 0.24 basis points from 0.06 percent last week to 0.18 percent this week at the official market.
The foreign exchange daily market turnover closed at $74.81 million on Friday, representing a 56.56 percent decline from $172.24 million recorded on Tuesday.
Week-on-week, the market turnover increased by 17.86 percentage points from 38.70 percent last week to 56.56 percent this week.
The Central Bank of Nigeria (CBN) injected a total of $210 million into the foreign exchange market within the week.
The 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 fell (Naira appreciated) for all of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months exchange rates fell by 0.39 percent, 0.57 percent, 0.91 percent, 1.96 percent and 4.01 percent to close at N411.73/USD, N414.17/USD, N415.68/USD, N419.95/USD and N428.65/USD respectively. Meanwhile, the spot rate remained flat at N379.00/USD, according to a report by Cowry Asset Management Limited.
“We expect Naira/USD to stabilize at most FX Windows amid CBN’s promise to increase USD liquidity. Also, the increase in crude oil prices at the international market is expected to boost forex supply,” analysts at Cowry Asset Management said.
The apex bank recently announced an increase in the amount of foreign exchange allocated to banks to meet customers’ eligible transactions needs.
The CBN’s planned forex increase will allow consumers access to a maximum amount of $4,000 foreign exchange for personal travels and maximum amount of $5,000 for business travel allowance, according to reports.
Last week at the Bankers Committee meeting, the CBN directed all banks to make sure there is availability of FX at all times for anybody who wants to buy Business Travel Allowance (BTA), Personal Travel Allowance (PTA), medical fees, student school fees and all the eligible invisible purchases, to ensure that Nigerians are not forced to go and use the parallel market.
Godwin Emefiele, governor of the CBN had, warned that speculators will lose money.
“I obviously cannot be of help to people or businesses who are into speculative FX demand. My promise instead to this group, whether foreign or local, is that the CBN will make sure they lose money”, Emefiele said
