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Naira Appreciates Against USD After Increased Dollar Supply

Naira appreciates against the US dollar at the opening of trade on Monday. 

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Naira Exchange Rates - Investors King

After trading at N890/$1 at the parallel market otherwise known as the black market on Friday, Naira appreciates against the US dollar at the opening of trade on Monday. 

The gain is a result of the increase in Dollar supply in the forex market on Monday. Unlike last week when dollar scarcity forced the naira to an all-time low against the US dollar and British Pound, traders confirmed enough dollar supply to ease demand pressure. 

In Lagos, the naira to dollar exchange rate traded between N850 and N870/$1 at the opening of trade on Monday while it traded between N840 and N860/$ at the close of the market. 

This represents about a 5.94 percent increase when compared to N890 it exchanged on Friday while it represents a 1.16 percent gain when compared intraday figure of Monday.

Investors King understands that the naira has been depreciating heavily following the central bank’s announcement to redesign a portion of the currency notes. 

It would be recalled the Central Bank of Nigeria disclosed it will issue redesigned N100, N200, N500, and N1000 notes to address counterfeiting and hoarding. 

Following the disclosure, several Nigerians who have large deposits of naira at home trooped to the bank to change their naira notes to dollars in order to beat the December deadline. This circumstance led to huge demands for dollars. 

Meanwhile, the Central Bank has disclosed that it has finalised arrangements for the new currency to begin circulation on December 15, 2022, after it would have been launched by President Muhammadu Buhari. 

According to the apex bank, the new and existing currencies will remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.

However, the redesign of the naira has been characterised by a number of dramas, part of which was the position of the Minister of Finance, Budget and National Planning, Zainab Ahmed. 

The minister stated when she appeared before the Senate Committee on Finance that her Ministry is not aware of the plan to redesign some naira notes. 

Similarly, a number of experts have cautioned the apex bank stating that while redesigning a portion of the naira note is not bad, the timing could however further hurt the economy. 

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Naira

Naira Falls to N1,676.90/$1 at Official Market, Slides to N1,708.87/$1 at Alternative Window

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New Naira notes

The Naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 0.61 percent and sold against the US Dollar at N1,676.90/$1 on Monday, November 4.

At the official market, the domestic currency recorded a N10.18 drop versus N1,666.72/$1,  valued at the previous session on Friday.

Equally at the black market, the Naira lost N4.76 against the greenback to close at N1,708.87 to the US Dollar compared to N1,704.11/$1 it closed on Friday.

The outcomes came as the weak supply gripping the marker cross paths with high seasonal demand placing pressure on the local currency.

This occurred as supply dropped further at the session as turnover published on the FMDQ Group website stood at $79.47 million indicating that the session’s turnover fell by 15.7 per cent, indicating that there was a decrease of $14.75 million compared to $94.22 million published the previous day.

With the year coming to a close, there has been a higher demand for FX but with the Central Bank of Nigeria (CBN) limiting interventions, constraints have seen a volatile outcome for the local currency.

Equally, the domestic currency also witnessed losses against the British currency and the Euro in the week’s opening session.

On the Pound Sterling, the local currency made a loss of N3.38 to wrap the session at N2,160.63/£1 from N2,157.25/£1 that it sold at the previous session and against the Euro, the Nigerian currency closed at N1,816.40/€1 versus N1,814.79/€1, indicating an N1.61 depreciation.

The local currency also declined in its value against the British currency in the black market as it dropped by N9.63 to sell at N2,217.39/£1 compared with the preceding session’s N2,207.76/£1 and followed the same pattern against the Euro as it depreciated N10.73 to quote at N1,862.98/€1 versus the previous day’s rate of N1,852.25/€1.

The Naira, however, had a different trend against the Canadian Dollar as it appreciated by N1.66 to close at N1,222.33 per Canadian Dollar, compared to Friday’s N1,223.99 per CAD.

CBN’s limited capacity to sufficiently intervene across the market segments and suboptimal inflows from Foreign Portfolio Investors will continue to impact the trajectory of the local currency in coming weeks, analysts said.

Measures that don’t translate to more injection of FX into the pressured market will only provide temporary reprieve, they added.

Meanwhile, the CBN will soon begin to test run its automated FX platform to increase market confidence and reduce speculative trading.

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Naira

Naira Appreciates to N1,666 Per Dollar at FX Market, N1,704.11 at Parallel Market

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Naira Exchange Rates - Investors King

The Naira appreciated by 0.5 percent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday following an N8.77 rise to close at N1,666.72/$1 compared with Thursday’s closing rate of N1,675.49/$1 despite worsening supply in the market.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover fell by $72.41 million or 43.5 per cent to $94.20 million from $166.61 million.

However, the local currency slid on the Pound Sterling and the Euro in the final session. For the British currency, the local currency depreciated by N10.10 and closed at N2,157.25/£1 from N2,147.15/£1 while it closed at the rate of N1,814.79/€1, a slump of N23.43 against N1,791.36/€1 against the Euro.

Meanwhile, the Naira rose further by N7.66 against the American in the parallel market segment to close at N1,704.11 to the US Dollar compared to N1,711.77/$1 it closed on Thursday.

Also, the domestic currency extended its gain against the British currency during the final session as the Naira made a further appreciation of N16 to trade at N2,207.76/£1 from N2,223.76/£1 that it sold at the previous session and against the Euro, it appreciated N14.82 to close at N1,852.25/€1 versus the previous day’s rate of N1,867.07/€1.

The local currency gained a marginal N1.62 to close at N1,233.99 per Canadian Dollar, compared to Thursday’s N1,235.61 per CAD.

The Central Bank of Nigeria (CBN) at the recently concluded World Bank/IMF meetings held in Washington, DC last week said the foreign exchange market will not depend on the apex bank’s intervention for supply and stability.

This is evidenced by the stop of sales of Dollars to the market as it plans to improve supply organically without its intervention from time to time while maintaining balance in the market.

“While you might see us intervene from time to time, we are trying to ensure the market is not dependent on the intervention of the central bank.

“I think that we are looking at conditions that market return as much as possible to improve supply organically without the Central Bank having to put in money all the time,” the CBN deputy governor on economic policy, Mr Mohammed Abdullahi, disclosed.

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Naira

Naira Loses 2.7% on Dollar at NAFEX, Gains N6 to N1,711/$1 at Parallel Market

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New Naira Notes

The Naira fell by 2.7 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,675.49/$1 on Thursday, October 311 as the local currency depreciated despite a slight increase in supply.

In the official market, the domestic currency lost N44.32 on the American currency in the official market versus N1,631.17/$1, which it closed in the previous session on Wednesday.

In a turn of fortune, the Naira rose N6.66 against the greenback in the parallel market segment to close at N1,711.77 to the US Dollar compared to N1,718.43/$1 it closed on Wednesday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $166.61 million indicating that the session’s turnover jumped by 29.2 per cent, indicating a rise of $37.63 million compared to $128.98 million that was published in the last trading session.

Equally, the Naira weakened its value against the Pound Sterling in the official market by N3.75 to sell at N2,147.15/£1 compared with the preceding session’s N2,143.40/£1.

It followed the same path against the Euro, depreciating N9.29 to quote at N1,791.36/€1 versus midweek’s closing rate of N1,782.07/€1.

In a different outcome in the black market, the domestic currency headed up against the British currency during the Thursday session as the Naira made an appreciation of N10.86 to wrap the session at N2,223.76/£1 from N2,234.62/£1 that it sold at the previous session.

However, the Naira followed a different pattern against the Euro as it depreciated N12.51 to close at N1,867.07/€1 versus the previous day’s rate of N1,854.56/€1.

The local currency gained a marginal 9 Kobo to close at N1,235.61 per Canadian Dollar, compared to Wednesday’s N1,235.70 per CAD.

Investors King reports that the Nigerian macro environment is placing pressure on the FX market with latest data showing that there is a high money supply in the system complemented by a wider government budget deficit.

The Central Bank of Nigeria (CBN) revealed that Nigeria’s money supply often known as M3 grew 62.8 percent in the last one year to N109 trillion from N66.9 trillion in September 2023.

 

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