This week, the naira is predicted to stabilize even more as demand pressure moderates and the supply of dollars declines.
The naira strengthened against the dollar on both official and black market exchanges last week, contributing to the favorable conclusion of the foreign exchange (FX) market.
According to data obtained from the FMDQ Securities Exchange, the naira gained 0.95 percent last week as the dollar was quoted at N1,602.75 on Friday, greater than N1,617.96 posted on Monday, the start of the trading week, at the official FX market.
The local currency at the parallel market ended the trading week flat, falling 0.31 percent to N1,605 on Friday compared to N1,610 on Monday, according to data compiled from several street vendors and trading platforms.
From $1,073.50 million on Monday, the first trading day of the week, to $848.14 million on Friday, the dollar supplied by FX market participants dropped by 20.99 percent.
When Nigeria’s external reserves continued to rise for a second straight month, the pressure on the naira/dollar exchange rate lessened last week.
According to data released by the Central Bank of Nigeria (CBN), foreign exchange reserves rose from $33.17 billion at the start of February 2024 to $34.37 billion on March 12, 2024, a 3.62 percent rise.
According to data from the FMDQ, the naira finished unchanged on Friday at 1,602.75 per dollar daily. This is 0.39 percent firmer than the naira’s Thursday closing price of 1,608.98/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Friday’s intraday high finished at N1,615.50 per dollar, which was higher than the N1,625 spot price from Thursday. Additionally, on Friday, the intraday low strengthened to N1,524.99, surpassing the N1,576 reported on Thursday.
From $243.65 million on Thursday to $137.43 million on Friday, the daily FX market turnover decreased by 43.59 percent.
The naira was stable at 1,605 per dollar on Friday in the parallel market, sometimes referred to as the black market.
Afrinvest Securities Limited reported that as of March 14, 2024, the CBN’s foreign exchange reserves have increased by 0.9 percent weekly to $34.4 billion. In the meantime, activity fell by 37.4% w/w to $1.0 billion during the NAFEM window.
“In the parallel and official currency markets, the Naira appreciated versus the USD. The Naira closed at N1,602.75/$1.00 at the official window, up 1.5 percent week over week against the USD. In the parallel market, the pair closed at 81,595.00/$1.00, representing a 31bps gain. Barring any significant surprises, we anticipate rates in all FX divisions of the market to follow a similar path this week,” according to analysts at Afrinvest.
