Connect with us

CURRENCIES

Naira stabilizes in forex markets as dollar supply hits record low during curfew

The naira remained stable against the dollar at the I&E window, closing at N385.75/$1.

Published

on

Forex turnover hit record low dropping by 81.5% as Nigeria’s exchange rate at the NAFEX window remained stable against the dollar to close at N385.75/$1 during intraday trading on Wednesday, October 21.

Also, the naira remained stable against the dollar, closing at N463/$1 at the parallel market on Wednesday, October 21, 2020, as the imposition of the curfew bits hard on businesses.

This is also as businesses shut down due to the outbreak of violence in some parts of the country including Lagos during the protest against the special anti-robbery unit (SARS) and police brutality by the Nigerian youth.

Parallel market: 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 N463/$1 on Wednesday. This was the same rate that it exchanged for on Tuesday, October 20.

  • The local currency had strengthened by about 7.8% within the one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders. The measure
  • The CBN has sold over $500 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to 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.
  • The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
  • Despite the drop in speculative buying of foreign exchange, 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 remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N385.75/$1.

  • This was the same rate that it exchanged for on Tuesday, October 20.
  • The opening indicative rate was N386.24 to a dollar on Wednesday. This represents a 14 kobo gain when compared to the N386.38 that was recorded on Tuesday.
  • The N386 to a dollar is the highest rate during intraday trading. It also sold for as low as N384/$1 during intraday trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window hit record low as it declined by 81.5% on Wednesday, October 21, 2020.

  • According to the data tracked  from FMDQ, forex turnover dropped from $32.67 million on Tuesday, October 20, 2020, to $6.05 million on Wednesday, October 21, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The continuous drop in forex supply 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.
  • As part of the measure to check forex abuse and check illegal transactions, the CBN last month directed the freezing of accounts of about 38 companies.
  • 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 August was about $857 million, compared to $937 million in July.
  • 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.
  • According to Reuters, currency traders said that the naira is expected to be stable this week as banks limit foreign exchange transactions by both firms and individual buyers on the unofficial black market to curb speculation
Advertisement
Click to comment

Leave a Reply

CURRENCIES

Naira falls to 12-week low at black market as demand pressure increases

At the black market, the Naira depreciated against the dollar to close at N475/$1 on Monday.

Published

on

Forex turnover dropped marginally by 2.26%, as Nigeria’s exchange rate at the NAFEX window remained stable against the dollar to close at N386/$1 during intra-day trading on Monday, November 16.

Also, the naira depreciated against the dollar, closing at N470/$1 at the parallel market on Friday, November 13, 2020 – its weakest level in 12 weeks as the inability of the official market to meet increasing forex demand of manufacturers and traders put further pressure on the parallel market

This is despite the allocation of about $1 billion to Bureau De Change (BDC) Operators since September by the CBN.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N475/$1 on Monday.

This represents a N5 drop when compared to the N470/$1 that it exchanged for on Friday, November 13.

  • 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.
  • The CBN has sold about $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
  • This was expected to inject more liquidity to 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.
  • The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
  • Despite the drop in speculative buying of foreign exchange, 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 remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N386/$1.

  • This was the same rate that it exchanged for on Friday, November 13.
  • The opening indicative rate was N385.50 to a dollar on Monday. This also represents a N1 gain when compared to the N386.50 that was recorded on Friday.
  • The N392.80 to a dollar was the highest rate during intra-day trading before it still closed at N386 to a dollar. It also sold for as low as N381/$1 during intra-day trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined marginally by 2.26% on Monday, November 16, 2020.

  • According to the data tracked  from FMDQ, forex turnover dropped from $113.95 million on Friday, November 13, 2020, to $111.38 million on Monday, November 16, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
  • The continuous drop in dollar supply 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.
  • A financial expert and Managing Director of Financial Derivatives had stated that he expects the exchange rate at the parallel market to likely depreciate to N470-N475/$1 in November and December due to low oil prices that will further limit foreign exchange supply.
  • Some members of MPC of the CBN have expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is as obligation of manufacturers to their foreign suppliers continues to increase in the face of dollar shortages.
Continue Reading

CURRENCIES

Naira falls to weakest level in 6 weeks at black market despite CBN intervention

The Naira depreciated against the dollar to close at N470/$1 at the black market.

Published

on

Forex turnover dropped by 39%, as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Friday, November 13.

Also, the naira depreciated again the dollar, closing at N470/$1 at the parallel market on Friday, November 13, 2020 – its weakest level in 6 weeks, despite the intervention of the CBN in the foreign exchange market – as the dollar supply is not enough to meet demand, especially as the pressure of the Christmas season sets in.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N470/$1 on Friday.

This represents a N2 drop when compared to the N468/$1 that it exchanged for on Thursday, November 12.

  • 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.
  • The CBN has sold over $500 million to BDCs since they resumed forex sales on Monday, September 7, 2020.
  • This was expected to inject more liquidity to 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.
  • The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
  • Despite the drop in speculative buying of foreign exchange, 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 Friday, closing at N386/$1.

  • This represents a 33 kobo drop when compared to the N385.67/$1 that it exchanged for on Thursday, November 12.
  • The opening indicative rate was N386.50 to a dollar on Friday. This also represents a 40 kobo drop when compared to the N386.10 that was recorded on Thursday.
  • The N386 to a dollar was the highest rate during intra-day trading, before it still closed at N386 to a dollar. It also sold for as low as N380/$1 during intra-day trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 39% on Friday, November 13, 2020.

  • According to the data tracked from FMDQ, forex turnover dropped from $186.91 million on Thursday, November 12, 2020, to $113.95 million on Friday, November 13, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.
  • The drop in dollar supply after the previous trading day’s increase, 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.
  • A financial expert and Managing Director of Financial Derivatives had stated that he expects the exchange rate at the parallel market to likely depreciate to N470-N475/$1 in November and December due to low oil prices that will further limit foreign exchange supply.
  • Some members of MPC of the CBN have expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is as obligation of manufacturers to their foreign suppliers continues to increase in the face of dollar shortages.
Continue Reading

CURRENCIES

U.S dollar tumble, Currency traders more risk averse

U.S dollar index used to gauge the greenback’s strength against 6 major currencies lost about 0.2% to settle at 92.710.

Published

on

The U.S dollar dropped significantly at its last trading session.

The plunge in the greenback’s value is coming on currency traders enthusiasm about a possible COVID-19 vaccine coupled with a strong outflow of funds to riskier assets like stocks.

What we know: At the time of filing this report, the U.S dollar index used to gauge the greenback’s strength against 6 major currencies lost about 0.2% to settle at 92.710 points.

The macro weighing heavily on the U.S dollar bulls is reports on Pfizer’s experimental vaccine was more than 90% effective, leading currency market traders to be more risk-averse at the last trading session of the week after Federal Reserve and the European Central stressed that the economic outlook remains blurry.

The U.S dollar pulled also dropped against most of its major rivals amid worries about the second wave of COVID-19 caseloads in the emerged markets.

What you must know: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc.

Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in fulfilling such payment obligations.

Giving key insights prevailing at the currency market Stephen Innes, Chief Global Market Strategist at Axi in a note to our source gave market reports on other notable pairs.

“Interest rate differentials – so often a principal driver for FX through both the signaling and carry structures – already show less vigor for currencies. Suggesting the most apparent nominee that will drive FX performance in this ‘new normal regime’ is the comparative growth.
The bullish dials are pointing to AUD, NZD, NOK, and SEK as the first pass candidates, and the laggards are likely to be the GBP, EUR, and JPY. With the dollar smack dab in the middle of all divergencies, I think it’s pretty clear idiosyncratic drivers will be the key in 2021 currency outlooks.”

What to expect: Market analysts expect currency traders to intensify their risk going moves into the coming week, meaning the U.S dollar might continue to be under pressure in the near term.

Continue Reading
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

Facebook

Follow us on Twitter

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 91 other subscribers

Trending