After significant downward pricing, the Nigerian naira saw a sharp appreciation on Monday against the dominant US dollar as demand for imports was met with sizeable foreign currency supply in the market.
Data from FMDQ Exchange indicated that the naira appreciated by 4.4% to N744.07 per US dollar from N776.90 at the Investors’ and Exporters’ foreign exchange window. In the open market, the local currency depreciated, with the Naira falling 0.36% to N792.5 from N792.
Last week, the non-deliverable forward market rate suggests the local currency will hit N785 per greenback in a month’s time. Some foreign currency analysts and investment bankers told MarketForces Africa that exchange rate movements depend largely on the weight of FX demand versus the volume of US dollars available on the supply side.
In its update, Coronation Research stated that the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate traded within the range of N600-841 but closed at N776.9 per greenback last week.
This points toward a depreciation of -1% or N7.7 over the five days trading session ended on Friday. In the forwards market, FX traded within the range of N751-824.
In the 1-month contract, the naira exchange rate depreciated by -0.05% to close at N801.2, and in the 3-month contract, fx depreciated by -0.04% to close at N820.2 per US dollar request.
Meanwhile, in the parallel market, the Naira closed at an average of N785, which translated to a 1% gap between the NAFEX and the parallel market rate.
Data from the FMDQ platform showed that NAFEX turnover decreased by 4.5% last week to USD 440.65 million. The NAFEX window recorded an inflow of USD360 million, Coronation Research said.
The breakdown of the sum showed that CBN accounted for 3.3%, foreign portfolio investors (FPIs) accounted for 8.4%, non-bank corporates accounted for 32.5%, exporters accounted for 49.5%, and others accounted for 6.3%.
Ahead of a $500 million maturing Eurobond ready for repayment, Nigeria’s external reserves declined by -0.2% or USD60.27 million to USD34.1 billion despite a surge in global oil prices.
Brent crude rose 0.19% to $78.32 per barrel yesterday, while WTI crude gained 0.46% to $73.52 per barrel. Oil futures fell on Monday, as traders assessed deflation fears in the top oil importer, China.