• Tuesday, July 23, 2024
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BusinessDay

Naira trades at 1,507.83/$ on official market as FX inflows hit $24bn

Naira under pressure as MPC convenes for a likely rate hike

The naira on Wednesday exchanged with the dollar at the rate of N1,507.83 at the official foreign exchange (FX) market, on improved liquidity as the country recorded $24 billion inflow in the first quarter of 2024.

After the day’s trading, the naira lost 0.47 percent as the dollar was quoted at N1,507.83 compared to N1,500.79 quoted on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange Limited.

The dollar supplied by willing buyers and willing sellers increased by 28.9 percent to $176.39 million on Wednesday from $136.75 million recorded on Tuesday.

The intraday high closed at N1,523 per dollar on Wednesday as against N1,507 closed on Tuesday. The intraday low quoted at N1,430.91 on the same day from N1,426 per dollar.

At the parallel market, popularly called the black market, the naira, traded at between N1,498 and N1,505 per dollar.

During an interview with Bloomberg on Tuesday, Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the country recorded a total foreign exchange (FX) inflow of $24 billion in three months of 2024.

Nigeria’s external reserves, which gives the apex bank the firepower to defend the naira have increased by 2.97 percent year-to-date to $33.70 billion as of June 25, 2024 from $33.01 billion recorded on January 2, 2024, data from the CBN showed.

In one-month precisely June 2024, the Nigerian economy recorded about $5.95 billion inflows from the World Bank and Afreximbank.

Foreign exchange inflows refer to the movement of foreign currency into a country. These inflows can come from various sources, such as, exports, when a country sells goods and services to other countries, it earns foreign currency from these transactions.

Foreign Direct Investment (FDI), is another source of inflows and it is about investments made by foreign entities in domestic businesses, such as setting up factories, buying property, or acquiring stakes in local companies. Other sources of FX inflows include remittances, foreign aid and grants and portfolio investment.

Cardoso noted that the foreign exchange inflows for the first quarter of 2024 are approximately 50 percent higher than the inflows recorded in previous quarters up to 2021.

The CBN governor stated that the monetary policy tools used by the apex bank are positively affecting the FX market. “These tools are having a positive impact. Therefore, we believe that by continuing on this path, liquidity will continue to grow,” he said.