Following a holiday, Tuesday saw the return of trade on Nigeria’s foreign exchange (FX) market, with the naira slightly strengthening (0.05) against the dollar on the official market.
At the Investors and Exporters (I&E) forex window, Nigeria’s official foreign currency market, the dollar was quoted at N463.44 after trade on Tuesday, up 0.05 percent from the N463.67 posted on Thursday last week.
The majority of currency dealers who took part in the Tuesday auction at the foreign exchange market kept their bids between N458.04 (low) and N466.00 (high) per dollar.
From a high of $139.85 million on Thursday, the daily foreign exchange market turnover fell by 55.17 percent to $62.69 million on Tuesday.
N738 per dollar was the same on the parallel market, also referred to as the black market.
The Naira traded quietly last week, holding its ground from the week before to close at N738/USD from N738/USD the week before on the black market.
The Naira edged out the US dollar at the investors’ and exporters’ FX window by N0.33, or 0.1 percent, week over week, to close at N463.67/USD from N464/USD. According to a report by Cowry Asset Management Limited, traders maintained bids between N462 and N465 last week as a result of weaker demand for the US dollar.
The spot exchange rate in the interbank foreign exchange forward contracts market stayed at N462/USD, according to the report.
“Also, in our analysis of the Naira/USD exchange rate at the weekly Naira FX Forward Contracts Markets, it was the dollar reign across major forward contracts with depreciations reported for the Naira at the 2-Month, 3Month and the 6-Month Contracts by 0.14 percent, -0.82 percent, and -0.61 percent respectively to close at offer prices of N479.11/USD, N489.86/USD and N516.33/USD week on week. On the other hand, the Naira gained by 0.11 percent and 0.30 percent week on week for the 1-Month and 12-Month contracts to close at contract offer prices of N468.68/USD and N560.79/USD,” analysts at Cowry Asset said.
On the oil market last week, the price of crude oil continued to decline throughout the week, trading at $80 per barrel due to supply-side and demand-side worries that were mostly offset by anticipation that the Fed would raise interest rates further.
On the domestic front, however, data from the CBN data bank revealed that the price of Bonny Light crude increased by 0.32 percent, or (USD0.28) week over week, to close at USD88.15 per barrel from USD87.87 per barrel in the previous week. This increase was attributed to tightening supply, an anticipated increase in interest rates by the Fed, ongoing concerns about oil demand, and market volatility brought on by price fluctuations.
“We expect the naira to trade in a relatively calm band across various market segment barring any market distortion and as the apex bank continues its weekly FX market intervention to defend the value of the naira, next week, ” the analysts said.
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