Naira

RMB Predicts Easing Pressure on Naira with Decrease in FX Contracts

Published

5 months ago

June 5, 2024

The Nigerian naira is poised for a period of relative stability in the coming months as pressure from forward central bank foreign exchange (FX) contracts diminishes, according to a recent report by Rand Merchant Bank (RMB) in Lagos.

The easing pressure is expected to provide a much-needed respite for the embattled currency, which has faced significant devaluation over the past year.

Last week, the market absorbed the equivalent of $1.3 billion in forward FX contracts, a move that is anticipated to reduce the outstanding forward contracts to just $198 million between now and December.

This reduction is a positive signal for the naira, which had depreciated 9.9% last week to close at 1,486 per dollar, before recovering slightly to 1,476.1 on Monday.

“We expect the pressure on the naira to ease going into the second half of the year,” said Ademola Olayiwola, an analyst at RMB.

“We expect some stability in the foreign exchange market as the backlog of FX demand is gradually cleared and the central bank continues its interventions. The reduction in forward contracts signals a decrease in speculative attacks on the naira, which has been a significant factor in its volatility.”

Also, the Central Bank of Nigeria (CBN) has implemented several measures to stabilize the currency, including tightening monetary policy and increasing foreign reserves.

These actions, coupled with the anticipated reduction in forward contracts, are expected to help balance supply and demand dynamics in the FX market.

Olayiwola also noted that while the naira may experience short-term fluctuations, the overall outlook for the second half of the year remains cautiously optimistic.

“The key to sustaining this stability will be the government’s ability to manage external pressures and maintain investor confidence,” he added.

The Nigerian economy, heavily reliant on oil exports, has faced numerous challenges, including fluctuating oil prices and global economic uncertainties.

However, recent upticks in oil prices and efforts to diversify the economy are seen as positive developments that could support the naira’s stability.

Market participants will be closely monitoring the central bank’s policies and external economic factors in the coming months.

As the forward contract obligations diminish, there is a hopeful sentiment that the naira could find a more stable footing, reducing the need for aggressive central bank interventions and allowing for a more balanced economic environment.

In summary, the outlook for the Nigerian naira is cautiously optimistic as forward FX pressures ease, providing a potential pathway to stability.

The central bank’s continued efforts and favorable economic conditions will be crucial in determining the currency’s trajectory in the near future.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Naira

Naira Appreciates 3.6% on US Dollar, Trades N1,600

Published

2 days ago

October 19, 2024

Iyanuoluwa Martins

Naira to Dollar Exchange- Investors King Rate - Investors King

The Naira rose 3.6 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,600.78/$1 on Friday, October 18 as the local currency appreciated amid an increased supply.

The domestic currency gained N59.71 on the American currency versus N1,660.49/$1, which it closed in the previous session on Thursday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $350.72 million indicating that the session’s turnover rose by 6.2 percent, indicating a rise of $20.54 million compared to $330.18 million that was published in the last trading session.

Meanwhile, the Naira witnessed a flat outcome against the Pound Sterling and the Euro as it closed on the British currency at N2,153.90/£1 and on the European currency at N1,791.06/€1 quoted in the preceding session.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,690.82 to the US Dollar, a drop of N1.31 compared to N1,689.51/$1 it closed during the Wednesday trading session.

In the past months, the Naira has been volatile against the Dollar at the FX market despite interventions by the Central Bank of Nigeria.

The World Bank also said the Nigerian Naira is among the worst-performing currencies in sub-Sahara Africa at the end of August 2024.

In its latest edition of Africa’s Pulse report, the international organisation said the Naira is at par with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

However, the local currency appreciated in its value against the British Pound Sterling in the official market by N54 to sell at N2,201.93/£1 compared with the preceding session’s N2,147.93/£1 and followed the same pattern against the Euro as it gained N4.58 to quote at N1,835.29/€1 versus the previous day’s rate of N1,839.87/€1.

The local currency also depreciated N16.11 to close at N1,217.18 per Canadian Dollar, compared to Thursday’s N1,201.07 per CAD.

Naira

Naira Drops 0.04% to N1,659.69/$1 at Official FX Market, Dips at Parallel Market

Published

5 days ago

October 17, 2024

Iyanuoluwa Martins

The Naira fell to N1,659 per Dollar on Wednesday in the official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market (NAFEX).

The local currency fell by 72 Kobo or 0.04 percent to close at N1,659.69/$1 compared with Tuesday’s closing rate of N1,658.97/$1.

The market continued to weigh the recent inflation rise after the National Bureau of Statistics (NBS) on Tuesday said Nigeria’s inflation rose to 32.70 percent in the month of September, the first time after moderating in July and August.

Analysts from the World Bank ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024, noting that the local currency has lost about 43 percent.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for Dollars and limited Dollar inflow is responsible for Naira depreciation in the last months.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $40.85 million or 18.7 percent to $177.01 million from $217.86 million.

The Naira weakened its value against the Pound Sterling in the official market by N64.28 to sell at N2,153.90/£1 compared with the preceding session’s N2,089.62/£1.

It followed the same route against the Euro as it depreciated N51.67 to quote the midweek session at N1,800.79/€1 versus the preceding rate of N1,749.12/€1.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,693.32 to the US Dollar, a drop of N29.61 compared to N1,663.71/$1 it closed during the Wednesday trading session.

The Naira also dropped in its value against the British Pound Sterling in the official market by N38.17 to sell at N2,159.12/£1 compared with the preceding session’s N2,120.95/£1 and followed the same pattern against the Euro as it depreciated N31.51 to quote at N1,847.94/€1 versus the previous day’s rate of N1,816.43/€1.

The local currency also depreciated N7.07 to close at N1,204.66 per Canadian Dollar, compared to Tuesday’s N1,197.59 per CAD.

Naira

World Bank Lists Naira Among Africa’s Worst Performing Currencies

Published

5 days ago

October 16, 2024

Ugwoke Ogbodo

The World Bank has ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for dollars and limited dollar inflow is responsible for Naira depreciation in the last months.

According to the report, as of August, the Naira lost about 43 percent.

It added that by August 2024, the Ethiopian birr, Nigerian naira, and South Sudanese pound were among the worst performers in the region.

According to the report, the Nigerian naira continued losing value, with a year-to-date depreciation of about 43 percent as of end-August.

It stated that the increase in demand for US dollars in the parallel market, driven by financial institutions, money managers, and non-financial end-users, combined with limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the central bank explain the weakening of the naira.

The Naira plummeted to a new record low, closing at N1,700 per dollar in the parallel market on October 14, 2024, according to data from Bureau de Change (BDC) operators.

This represents a 0.29% drop from its previous rate of N1,695/$1 recorded on October 11, despite a surge in crude oil prices, which have surpassed $80 per barrel.