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Naira Gains Across Foreign Exchange Markets - CHANNELS TV
The increase was supported by steady inflows, with non-bank financial institutions and exporters contributing 62.44 per cent of the total supply.
The naira appreciated by N5.72 across foreign exchange (FX) markets after trading on Monday.
The dollar was quoted at N1,600.43, marking a gain of 0.4 per cent compared to N1,606.15 seen on Friday at the Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN).
The increase was supported by steady inflows, with non-bank financial institutions and exporters contributing 62.44 per cent of the total supply.
A report by Coronation Merchant Bank’s research arm showed inflows into the NFEM window stood at $619 million, reflecting a 7.34 per cent decline from the $668 million recorded the previous week.
Of the total inflow, the CBN contributed 18.00 per cent, while Foreign Portfolio Investors (FPIs) accounted for 16.78 per cent.
Non-bank corporates led with 34.27 per cent, followed by exporters at 28.17 per cent. Other sources made up the remaining 2.78 per cent.
The naira remained steady at N1,625 per dollar at the parallel market, also known as the black market, according to street traders and data from the online data collating platforms.
In the FX market last week, the Naira lost 0.25 per cent w/w against the dollar in the official spot market, closing at N1,606.15/US$1, marking the third week of decline in a row despite CBN’s intervention. The 1-month forward rate closed at N1,641.59/US$1. The 3-month forward contract rate closed at N1,707.37/US$1. The six-month forward contract closed at N1,799.21/US$1 as the 1-year forward rate closed at N1,988.66/US$1. At the parallel market, the Naira lost 0.93 per cent against the dollar, closing at N1,625.00/US$1 on Friday.
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The increase comes as the World Bank said that Nigeria’s FX market turnover remains largely dominated by interventions from the CBN, and inflows from foreign portfolio investors (FPIs), despite recent reforms aimed at liberalising the market.
According to the Bank’s latest Nigeria Development Update report emtitled, ‘Building Momentum for Inclusive Growth,’ released on Monday, while overall FX turnover has improved following recent policy changes, the market is still heavily reliant on CBN interventions, often aimed at managing volatility and short-term foreign portfolio investment attracted by high yields and potential revaluation gains.
“Although helpful as a source of FX, debt financing, and external adjustment, FPI flows are volatile, especially when they are short-term as is predominantly the case for Nigeria,” the report noted. “For full consolidation of the FX market, traditional sources of inflows such as oil exports and remittances must return consistently and substantially to the official window.”
