DUE to demand pressures amidst dollar scarcity, the Nigerian local currency, the naira, has fallen at the official foreign exchange and has also depreciated on the parallel market ahead of the Easter celebrations.
The local currency was devalued to N417.50 in the foreign exchange market for investors and exporters, a break out from the resistance spot level seen in recent weeks. This indicates growing tensions, which could result in the naira losing even more value.
In the parallel market, the Naira fell to N590 from N588 at the start of the week, marking another another resistance level in the FX markets.
Despite the Central Bank of Nigeria’s (CBN) adoption of N65 refunds for exporters selling through an official window, this indicates higher demand for foreign currencies.
Meanwhile, Nigerian banks are charging clients more than N500 for each dollar purchased online using debit cards. To comply with regulatory limits, some banks limited spending to $20 per month, while others charged higher rates.
According to figures on the central bank’s website, Nigeria’s foreign exchange reserves grew by $53.48 million this week to $39.71 billion.
Cordros Capital said in a market report that total turnover fell 14.7 percent from the start of the week to $498.85 million on Wednesday, with trades completed within the N410.00 – N453.15/$ band.
The turnover of the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) jumped from $95.3 million to $168.6 million last Friday, according to data from the FMDQ.
The I&E (NAFEX) window received $308.0 million in inflows, with the CBN accounting for 23.9 percent, foreign portfolio investments (FPIs) 17.3 percent, non-bank corporates 24.6 percent, exporters 25.1 percent, and others 9.1 percent.
In todays contracts in the forward market, the naira was steady at the 1-month (N418.12/$) and 6-months (N432.47/$) but appreciated at the 3-months (+0.1% to N423.78/$) and 1-year (+0.2% to N448.01/$) contracts.
