Naira Strengthens At Official Market, Stable On Parallel Window (SEE EXCHANGE RATES)

Naira Strengthens At Official Market, Stable On Parallel Window (SEE EXCHANGE RATES)

On Tuesday, Nigeria’s Naira exhibited strength, reaching N806.73 against the dollar at the official foreign exchange (FX) market, a notable improvement from its previous closing rate of N837.77 on Monday.

Market analysts attribute the appreciation of the local currency to a decline in dollar demand within the official foreign exchange market. The closing rate for the dollar on Monday, as reported by the Financial Markets Dealers Quotations (FMDQ), was N837.77, surpassing the N927.19 recorded on the preceding Friday at the Autonomous Foreign Exchange Market (NAFEM).

For willing buyers and sellers, the bid rate for dollars stood at N1,021, demonstrating strength compared to the N1,160/$1 offered on Friday. The higher bid rate on the spot trading remained stable at N701 per dollar.

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The decrease in dollar supply on Monday resulted in a 32.87 percent drop in the daily foreign exchange market turnover, falling to $73.93 million from the $110.14 million recorded on the previous Friday.

Furthermore, the naira maintained stability on Tuesday, closing at N1,165 to the US dollar, consistent with the rate observed on Monday.

Afrinvest (West) Africa Limited, an investment banking and research firm, noted in a client note that the ongoing demand-supply imbalance in the foreign exchange market had led to a 1.1 percent month-on-month decrease in the Central Bank of Nigeria’s foreign reserves, settling at US$33.0 billion in November.

In the NAFEM segment, the naira experienced a 2.1 percent weakening on a month-on-month basis, reaching ₦832.32/$1.00 by the end of November against the base currency (US$). In contrast, in the parallel market, the naira appreciated by 0.9 percent month-on-month, closing at N1150.00/$1.00.

Looking ahead, the naira is anticipated to trade within a similar band across FX segments, barring any significant shifts in market liquidity. FSDH Research also acknowledged an increase in activities at the NAFEM due to the attractive interest rates in the money market, which might attract trade investors to bring investments into Nigeria, as indicated in their equity research note.

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