Naira ends week stable amid liquidity shortfall
The concluded trading week was calm as the naira/dollar exchange rate closed flat across the foreign exchange market segment, amid liquidity, external reserves decline and oil price increase.
Naira closed at N410.00 on Friday, the same rate it closed on Monday at the Investors and Exporters (I&E) forex window. It weakened marginally by 0.08 percent week-on-week when compared to the previous week that ended on April 23, 2021.
On Tuesday, the local currency weakened by 0.40 percent as the dollar closed at N411.67k compared to N410.00 closed on Monday at the I&E window, data compiled by BusinessDay from the FMDQ indicated.
Nigeria’s currency on Wednesday reversed the previous loss and strengthened by 0.10 percent against the dollar in spite of the decline in liquidity at the same market segment. After trading on Wednesday, Naira/dollar exchange rate closed at N411.25k as against N411.67k closed on Tuesday according to the data from the FMDQ.
On Thursday strengthened marginally by 0.06 percent as the naira/dollar exchange closed at N411.00k at the I&E forex window, lower than N411.25k closed on Wednesday.
The exchange rate remained flat at N482 at the Bureau De Change (BDC) segment of the foreign exchange market and N485 at the parallel market at the end of the trading week.
The foreign exchange market turnover declined by 34.36 percentage point week-on-week to 19.72 percent at the end of the trading week on Friday from 54.08 percent recorded the previous week that ended on April 23, 2021.
The daily turnover increased by 19.72 percent to $56.81 million on Friday from $47.45 million recorded on Monday, the opening trading week.
Nigeria’s external reserves have declined by 1.94 percent to $34.94 billion as of April 28, 2021, from $35.25 billion as of April 16, 2021, according to the data obtained from the Central Bank of Nigeria (CBN).
The decline in the external reserves is attributed to lower foreign exchange receipts. The January 2021 economic report of the CBN showed that external reserves stood at US$35.44 billion at the end of January 2021, a decrease of 2.8 per cent and 3.5 per cent from US$36.46 billion in December 2020 and US$36.73 billion in January 2020.
At that level, the external reserves position could cover 6.1 months of import for goods and services and 8.2 months of import for goods only. Available data showed that Nigeria’s reserves per capita decreased to US$171.88, compared with US$176.89 at the end of December 2020.
This was below other countries such as South Africa and Egypt with respective reserves per capita of US$876.57 and US$391.86, in January 2021.
A breakdown of external reserves by ownership revealed the shares of CBN as US$30.18 billion (85.18 per cent); Federal Government, US$5.18 billion (14.62 per cent); and Federation, US$0.07 billion (0.20 per cent).
In terms of currency composition, the US dollar at US$28.64 billion, accounted for 80.81 per cent; Chinese yuan, US$4.31 billion (12.16 per cent); special drawing rights, US$2.12 billion (6.0 per cent); GB Pounds, US$0.24 billion (0.66 per cent); Euro, US$0.12 billion (0.34 per cent); Japanese Yen, US$0.01 billion (0.03 per cent); while other currencies accounted for the balance.
The price of Brent crude oil (petroleum), which has remained at about $40 per barrel last year, has risen to $68.62 per barrel as of 8.34 pm on Thursday, April 29, 2021.