The Naira had a minor dip during the first trading session of May at the NAFEM window, closing at N1,402.67 to the dollar, a decrease of 0.83% from the previous close of N1,390.96 in April.
The Naira fluctuated throughout the day, reaching a high of N1,445 and a low of N1,299.42 versus the dollar, resulting in a notable spread of N145.58, according to market data from FMDQ.
In the meantime, the amount of dollar transactions increased slightly by 3.32% to $232.84 from $225.36 on the Tuesday before.
The Naira continued to decline on the black market, falling 1.45% from its April rate of N1,360 to N1,380 per dollar on May 2.
With this change, the difference in pricing between the parallel market and NAFEM dropped from N40.96 on Tuesday to just N22.67.
Good news! The Stanbic IBTC Nigeria PMI increased marginally from 51.0 in March to 51.1 in April. This improvement was credited to the strengthening of the Naira, which reduced inflationary pressures and increased business activity in Nigeria to a three-month high in April 2024.
Further Understanding
During the Investors’ and Exporters’ (I&E) window, the Nigerian Naira fluctuated, peaking at N1,445 and falling to N1,299.42.
The Naira depreciated by 2.86% versus the British pound, ending the day’s trading at N1,750, down from N1,700 the day before.
The Naira fell 3.33% against the euro, as the currency rate settled at N1,500, down from N1,450 in the previous session.
The Nigerian Autonomous Foreign Exchange Market (NAFEM) reported that there was a little increase in forex market activity, with the transaction volume increasing by 3.32% to $232.84 million, surpassing the previous number of $225.36 million.
After rising for six days straight, the total reserves of the Central Bank of Nigeria (CBN) increased to $32.255 billion on April 30 from $32.233 billion on April 29. This is a minor growth in reserves of 0.318%.
FX gains reduce the impact on inflation
The naira’s strengthening in April has played a major role in slowing the growth of purchase prices and output charges, according to the Stanbic IBTC Nigeria Purchasing Managers Index (PMI). Inflationary pressures have moderated in part because of this trend. The strengthened naira has caused the most modest price increase in about a year, according to the PMI report, which highlights the continued influence of currency rate swings on business conditions.
It claimed, “April showed a drop in inflationary pressures within Nigeria’s private sector, a welcome development following March’s enormous spike in both purchasing costs and selling prices. The primary Purchasing Managers’ Index (PMI) increased slightly from 51.0 in March to 51.1 in April. This increase represents the sixth consecutive month that the business conditions in the sector have improved, even though the overall progress has remained slow.”
The naira’s swings continued to have a substantial impact on business circumstances, which in turn affected pricing structures. Interestingly, the selling price increase that occurred most recently was the least significant to have occurred in almost a year, suggesting a slowdown in the rate of price increase. All four of the survey’s key sectors showed the same pattern of muted price increases.
