The naira is expected to stabilise further this week, following moderation in demand pressure, amid dollar supply decline.
The foreign exchange (FX) market ended last week on a positive note as the naira appreciated against the dollar across official and parallel markets.
Last week, the naira gained 0.95 percent as the dollar was quoted at N1,602.75 on Friday, stronger than N1,617.96 quoted on Monday, the beginning of the trading week, at the official FX market, according to the data compiled from the FMDQ Securities Exchange.
At the parallel market, the local currency closed the trading week flat by 0.31 percent to t N1,605 on Friday as against N1,610 on Monday, data collated from different street traders and trading platforms showed.
The dollar supplied by FX market players declined by 20.99 percent to $848.14 million on Friday compared to $1,073.50 million recorded on the previous trading week.
The pressure on the naira/dollar exchange rate eased last week as Nigeria’s external reserves sustained growth in one month.
Data from the Central Bank of Nigeria (CBN) showed that the foreign currency reserves increased by 3.62 percent to $34.37 billion as of March 12, 2024 from $33.17 recorded at the beginning of February 2024.
On a daily trading basis, the naira closed flat on Friday at 1,602.75 per dollar, representing 0.39 percent stronger than 1,608.98/$1 on Thursday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ indicated.
The intraday high closed at N1,615.50 per dollar on Friday, stronger than N1,625 quoted on Thursday on the spot. Also, the intraday low appreciated to N1,524.99 on Friday, stronger than N1,576 quoted on Thursday.
The daily FX market turnover declined by 43.59 percent to $137.43 million on Friday compared to $243.65 recorded on Thursday.
At the parallel market, also known as the black market, naira steadied at 1,605 per dollar on Friday.
According to a report by Afrinvest Securities Limited, the CBN’s forex reserves appreciated 0.9 percent week-on-week (w/w) to $34.4bn (as of 14/03/2024). Meanwhile, activity level in the NAFEM window decreased 37.4 percent w/w to $1.0bn.
“In the currency market, the Naira strengthened against the USD at both the official and parallel windows. At the official window, the Naira gained 1.5 percent w/w against the USD to close at N1,602.75/$1.00, while at the parallel market, the pair closed at 81,595.00/ $1.00, indicating a 31bps gain. This week, we expect rates across FX segments of the market to follow a similar trend barring any new developments,” analysts at Afrinvest said.
