• Friday, March 29, 2024
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BusinessDay

Naira appreciates against dollar across markets as demand moderates

The nation’s currency on Tuesday appreciated against the dollar across foreign exchange market segments following a moderation in demand for the greenback, traders told BusinessDay.

After trading on Tuesday, the market closed with naira exchanging with the dollar at rate of N419.50/$, gaining 0.18 percent over the last close of N420.25 per dollar on the previous day (Monday), at the Investors and Exporters (I&E) forex window, which is the official window.

Foreign exchange dealers who participated in the foreign exchange auction maintained bids at the rate of between N410 and N444 per dollar at the same official market.

At the parallel market popularly known as black market, naira strengthened by 0.49 percent against the dollar as it gained N3 to close at N605 per dollar as against N608/$ closed on Monday, traders said on Tuesday.

Read also:  Banks’ naira card limits fuel dollar demand at black market

Nigeria’s external reserves declined by 2.78 percent month-on-month to $38.54 billion as of May 27, 2022 compared with $39.65 billion recorded on April 27, 2022, data from the Central Bank of Nigeria (CBN) indicated.

The CBN’s economic report for the month of January 2022 showed that total foreign exchange sales to authorised dealers by the Central Bank was US$1.65 billion in January, representing a decrease of 3.1 per cent, relative to US$1.71 billion in December 2021.

A breakdown shows that foreign exchange sales at the Small and Medium Enterprises (SME) window, interbank/invisible foreign exchange sales and matured swaps contracts rose by 24.4 per cent, 25.9 per cent, and 60.8 per cent to US$0.14 billion, US$0.18 billion and US$0.21 billion, respectively, in January, relative to the amount in December 2021.

However foreign exchange sales to the I&E and Secondary Market Intervention Sales (SMIS) windows fell by 13.7 per cent and 16.3 per cent to US$0.58 billion and US$0.54 billion, respectively, in the month under review.

To enhance exchange rate management and achieve accurate value from import and export items in and out of Nigeria, the CBN introduced e-evaluator and einvoicing to replace the hard copy final invoice as part of the documentation for trade transactions. Effective February 1, 2022, import and export operations would require the submission of an electronic invoice (e-invoice) authenticated by the authorised dealer banks on the Nigeria Single Window portal – trade monitoring system (TRMS).

The CBN said the exchange rate of the naira at the I&E window remained relatively stable in the review period. The average exchange rate of the naira per US dollar at the I&E window depreciated by 0.4 per cent to N416.03/US$, compared with N414.34/US$ in December 2021.