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Naira gains at NAFEX window as CBN’s intervention in forex market continues

The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N393.83/$1.

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On January 5, 2020, the exchange rate between the naira and dollar closed at N393.83/$1, the second trading day of 2021 at the Investors and Exporters’ (NAFEX) window where forex is traded officially.

This is an appreciation from the N394.30 recorded on the previous trading day, January 4, 2021.

Themoneymetrics understands that intervention by the Central Bank of Nigeria has forced prices further down on Tuesday, sustaining the appreciation recorded on the last day of trading after the sharp depreciation recorded on the last trading day of 2020.

We also reported last week that the latest round of adjustment at the I&E window is temporary as the rates could fall back below N400/$1.

However, at the black market where forex traded unofficially, the exchange rate continued to remain stable at N470/$1 on Tuesday, January 5, 2021. The exchange rate at the parallel market closed at N470/$1 on the previous trading day January 4, 2021.  It has been trading at N470/$1 since the 29th of December 2020.

The exchange rate disparity between the parallel market and the official market widened again to N76.17 representing a 16% devaluation differential.

NAFEX

The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N393.83/$1 as against N394.30 reported on January 4, 2021.

  • This represents a 47 kobo gain when compared with that of the previous trading day.
  • The opening indicative rate was N394.63 to a dollar on Monday. This represents a N15.3 gain when compared to the N409.93 that was recorded on Monday, January 4, 2021.
  • The N411 to a dollar was the highest rate during intra-day trading before, it still closed at N393.83 to a dollar. It also sold for as low as N387.10/$1 during intra-day trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window rose by 47.3% on Tuesday, January 5, 2021.

  • According to the data tracked by Themoneymetrics from FMDQ, forex turnover rose from $22.75 million on Monday, January 4, 2021, to $33.51 million on Tuesday, January 5, 2021.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

Can the naira sustain below N400?

Last Thursday, December 31, 2020, the central bank allowed the exchange rate to depreciate to N410.25 as a late demand surge forced prices higher. Even though the highest price for the day was N411, the market still closed lower at N393.83 as the trend from the previous trading day continued, blowing any initial belief that a devaluation had occurred last week.

Devaluation supporters who had expected this to be a nudge towards “market reality” will be surprised by the appreciation recorded on Monday, suggesting that the central bank will continue with the defence of the local currency in the new year. On the flip side, policy supporters will cite this as the effect of market forces.

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CURRENCIES

Naira gains at NAFEX window as CBN squashes early devaluation thoughts

The Naira at the NAFEX window appreciated significantly against the dollar to close at N394.30/$1

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On January 4, 2020, the exchange rate between the naira and dollar closed at N394.3/$1, the first trading day of 2021 at the Investors and Exporters’ (NAFEX) window where forex is traded officially. This is a sharp reversal and an appreciation from the N410.25 recorded on the last day of trading December 31, 2020.

Themoneymetrics understands an injection of forex by the central bank forced prices lower on Monday reversing the depreciation recorded on the last day of trading. We had also reported last week that the latest round of adjustment at the I&E window is temporary as the rates could fall back below N400/$1.

However, at the black market where forex traded unofficially, the exchange rate remained stable at N470/$1 on Monday, January 4, 2021. The exchange rate at the parallel market closed at N470/$1 on the last day of trading December 31, 2020.  It has been trading at N470/$1 since the 29th of December 2020.

The exchange rate disparity between the parallel market and the official market widened again to N75.7 representing a 16% devaluation differential.

NAFEX

The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N394.30/$1 as against N410.25 reported on December 31, 2020.

  • This represents a N15.95 difference to start the year on a positive note.
  • The opening indicative rate was N409.93 to a dollar on Thursday. This represents a N17.05 drop when compared to the N392.88 that was recorded on Thursday last week.
  • The N411.05 to a dollar was the highest rate during intra-day trading before, it still closed at N394.30 to a dollar. It also sold for as low as N387/$1 during intra-day trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 90.3% on Monday, January 4, 2021.

  • According to the data tracked by Themoneymetrics from FMDQ, forex turnover dropped from $235.75 million on Thursday, December 31, 2020, to $22.75 million on Monday, January 4, 2021.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

Can the naira sustain below N400?

Last Thursday, December 31, 2020, the central bank allowed the exchange rate to depreciate to N410.25 as a late demand surge forced prices higher. Even though the highest price for the day was N411.05 the market still closed lower at N394.3 blowing any initial belief that a devaluation had occurred last week.

Devaluation supporters who had expected this to be a nudge towards “market reality” will be surprised by the appreciation recorded on Monday suggesting that the central bank will continue with the defense of the local currency in the new year. On the flip side, policy supporters will cite this as the effect of market forces.

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CURRENCIES

Naira falls to record low at NAFEX window as CBN adjusts exchange rate again

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N410.25/$1.

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Forex turnover rose by 43%, as the Naira’s exchange rate at the NAFEX window hit a record low, depreciating significantly against the dollar to close at N410.25/$1 during intra-day trading on Thursday, December 31.

Also, the Naira remained stable against the dollar – closing at N470/$1 at the parallel market on Thursday, December 31, 2020 – as the CBN moves towards exchange rate unification with the devaluation of the naira at NAFEX market.

The Association of Bureau De Change Operators (ABCON) has appealed to the Central Bank of Nigeria (CBN), to make BDCs payout agents for diaspora remittances.

According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the Dollar to close at N470/$1 on Thursday – the same rate that it exchanged for on Wednesday, December 30.

  • The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.
  • This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
  • However, the gains appear to have been completely erased with the recent crash of the exchange rate.
  • The CBN has sold over $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
  • This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
  • Despite the CBN’s intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N410.25/$1.

  • This represents a N16.25 drop when compared to the N394/$1 that it exchanged for on Wednesday, December 30.
  • The opening indicative rate was N392.88 to a dollar on Thursday. This represents a 7 kobo gain when compared to the N392.95 that was recorded on Wednesday.
  • The N412.05 to a dollar was the highest rate during intra-day trading before, it still closed at N410.25 to a dollar. It also sold for as low as N385/$1 during intra-day trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 43%  on Thursday, December 31, 2020.

  • According to the data tracked by Themoneymetrics  from FMDQ, forex turnover rose from $164.81 million on Wednesday, December 30, 2020, to $235.75 million on Thursday, December 31, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
  • The increase in dollar supply after last week’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
  • Some members of MPC of the CBN had expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is an obligation of manufacturers to their foreign suppliers, which continues to increase in the face of dollar shortages.
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CURRENCIES

Naira gains again across forex markets as dollar supply rises significantly

The Naira appreciated against the dollar, closing at N476/$1 at the parallel market on Thursday,

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Forex turnover rose significantly by 96.6%, as the Naira’s exchange rate at the NAFEX window appreciated marginally against the dollar to close at N394.60/$1 during intra-day trading on Thursday, December 10.

Also, the Naira appreciated against the dollar, closing at N476/$1 at the parallel market on Thursday, December 10, 2020, as the naira is expected to trade within a range across markets after the local currency received a boost from CBN’s easing of restrictions on diaspora remittances according to Reuters.

ABCON President, Aminu Gwadebe, had blamed the crash of the naira on illegal activities that include hoarding, speculation, illegal cash evacuations through the nation’s borders, use of the dollar for gratification and so on.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N476/$1 on Thursday.

This represents a N2 gain when compared to the N478/$1 that it exchanged for on Wednesday, December 9.

  • The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.
  • This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders
  • However, the gains appear to have been completely erased with the recent crash of the exchange rate.
  • The CBN has sold over $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
  • This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
  • Despite the CBN intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX: The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N394.60/$1.

  • This represents a 7 kobo gain when compared with the N394.67/$1 that it exchanged for on Wednesday, December 9.
  • The opening indicative rate was N392.79 to a dollar on Thursday. This represents a N1.30 drop when compared to the N391.49 that was recorded on Wednesday.
  • The N408.19 to a dollar was the highest rate during intra-day trading before, it still closed at N394.60 to a dollar. It also sold for as low as N382/$1 during intra-day trading.
  • Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 96.6% on Thursday, December 10, 2020.

According to the data tracked from FMDQ, forex turnover rose from $71.24 million on Wednesday, December 9, 2020, to $140.07 million on Thursday, December 10, 2020.

  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
  • The increase in dollar supply after the previous trading day drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
  • Some members of MPC of the CBN had expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is an obligation of manufacturers to their foreign suppliers that continues to increase in the face of dollar shortages.
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