Naira gains marginally as FX market resumes trading

Nigeria’s foreign exchange (FX) market resumed trading on Tuesday after the holiday, with naira gaining marginally (0.05) against the dollar at the official market.

After trading on Tuesday the dollar was quoted at N463.44, gaining 0.05 percent compared to N463.67 quoted on Thursday last week at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market.

Most currency dealers who participated at foreign exchange market auction on Tuesday maintained bids between N458.04 (low) and N466.00 (high) per dollar.

The daily foreign exchange market turnover declined by 55.17 percent to $62.69 million on Tuesday from $139.85 million recorded on Thursday.

At the parallel market, also known as black market, naira remained steady at N738 per dollar.

Last week, the Naira traded on a quiet note as it held grounds from the previous week to close at N738/USD from N738/USD in the previous week at the black market.

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At the investors’ and exporters’ FX window, the Naira edged out the United States’ dollar by N0.33 or 0.1 percent week on week to close at N463.67/USD from N464/USD the previous week traders maintained bids between N462 and N465 on the back of lower demand for the greenback, a report by Cowry Asset Management Limited stated.

The report noted that at the interbank foreign exchange forward contracts market, the spot exchange rate remained unchanged at N462/USD.

“Also, in our analysis of the Naira/USD exchange rate at the weekly Naira FX Forward Contracts Markets, it was the dollar reign across major forward contracts with depreciations reported for the Naira at the 2-Month, 3Month and the 6-Month Contracts by 0.14 percent, -0.82 percent, and -0.61 percent respectively to close at offer prices of N479.11/USD, N489.86/USD and N516.33/USD week on week. On the other hand, the Naira gained by 0.11 percent and 0.30 percent week on week for the 1-Month and 12-Month contracts to close at contract offer prices of N468.68/USD and N560.79/USD,” analysts at Cowry Asset said.

In the oil market last week oil price movement continued its retreat motion during the week to trade at $80 per barrel on demand concerns which have outweighed the supply-side concerns as was majorly reinforced by the heightened expectations for further rate hikes by the Fed.

However, on the home front, data from the CBN data bank showed that the Bonny Light crude price surged by 0.32 percent or (USD0.28) week on week, to close at USD88.15 per barrel from USD87.87 per barrel in the previous week amidst the tightening supply, expected Fed rates hike, persistent worries on oil demand and the market volatility due to price oscillations.

“We expect the naira to trade in a relatively calm band across various market segment barring any market distortion and as the apex bank continues its weekly FX market intervention to defend the value of the naira, next week, ” the analysts said.