Naira strengthens as dollar liquidity rises by 71.66%

Naira, Nigeria’s currency on Wednesday reversed its almost a week long depreciation, reporting gains after dollar liquidity improved at the official foreign exchange window known as Investors and Exporters (I&E) forex window.

The daily foreign exchange market turnover increased by 71.66 percent to $81.64 million on Wednesday from $47.56 million recorded on the previous day.

After trading on Wednesday, naira gained 0.52 percent as the dollar was quoted at N425.75/$ compared with N430 closed on Tuesday, at the I&E window, data obtained from the FMDQ show.

Most foreign exchange market dealers who participated in the auction on Monday maintained bids at N413.00 (low) and N431.00 (high).

At the parallel market, also known as the black market, the local currency closed unchanged at N614 per dollar selling price and N612 buying price.

Read also: Naira records all-time fall against dollar at official market

:In February 2022, the economy recorded higher net foreign exchange inflow, driven by favourable sovereign ratings and higher oil and gas prices, according to the CBN’s economic report for the month of February.

Aggregate foreign exchange inflow into the economy rose by 42.8 per cent, to US$6.32 billion in February 2022, compared to US$4.43 billion in January 2022.

However, the total foreign exchange outflow decreased by 5.8 per cent to US$3.17 billion, from the US$3.36 billion in the preceding month.

Further analysis shows that foreign exchange inflow through the CBN rose by 36.7 per cent to US$2.49 billion from US$1.82 billion in January 2022, attributed, mainly, to the 53.0 per cent increase in non-oil components, such as institutional swaps, returned payments, Treasury Single Account (TSA), and Third-party receipts, and other official receipts. Autonomous inflow also increased by 47.0 per cent to US$3.83 billion from US$2.61 billion, due to a rise in invisible purchases (ordinary domiciliary accounts and total Over-the-Counter purchases).

Foreign exchange outflow through the CBN declined by 12.0 per cent to U$2.29 billion, from US$2.60 billion in January, due, largely, to decreases in foreign exchange sales at the I&E, Small and Medium Enterprises (SME) intervention and interbank/invisible foreign exchange windows, as well as Third-Party Market Dealers Association (MDA) Transfers. Autonomous outflow, increased by 15.4 per cent to US$0.88 billion from US$0.76 billion in January, on account of increased invisible imports.

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