Connect with us

CURRENCIES

Naira strengthens at forex market despite significant drop in dollar supply

The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday.

Published

on

Forex turnover declined by 57% as Nigeria’s exchange rate at the NAFEX window appreciated for the first time after being stable for six consecutive trading days to close at N385.80/$1 during intraday trading on Tuesday, September 22.

Also, the naira remained stable for the second consecutive trading day closing at N465/$1 at the parallel market

Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N465/$1 on Tuesday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Monday, September 21.

Currency Developments

  • The local currency has strengthened by about 7.8% within the last one week at the black market, as the Central Bank of Nigeria 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 CBN has sold over $150 million to BDCs since the 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 failed to sustain the initial gains made after the CBN announced plans to provide liquidity.
  • BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders as it was inadequate to meet their expenses.
  • We also noted that forex traders monitored during the previous week appear to hoard forex as they anticipated further depreciation in the market.
  • There has been a drop in speculative buying of foreign exchange, although 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 N385.80/$1.

  • This represents a 20 kobo gain when compared to the N386/$1 that it exchanged for on Monday, September 21.
  • The opening indicative rate was N386.70 to a dollar on Tuesday. This represents a 55 kobo drop when compared to the N386.15 to a dollar that was recorded on Monday.
  • The N392.50 to a dollar is the highest rate during intraday trading before closing at the rate of N386/$1. It also sold for as low as N379.85/$1 during intraday trading.

Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 56.8% on Tuesday, September 22, 2020.

  • According to the data tracked from FMDQ, forex turnover dropped from $68.14 million on Monday, September 21, 2020, to $29.42 million on Tuesday, September 22, 2020.
  • The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The significant 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.
  • The average daily forex sale for last week was about $34.5 million which represents a drop from the $58.52 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 CBN in the latest report on Monetary, credit, foreign trade and exchange policy guidelines for fiscal year 2020/2021, lamented that forex market pressure which is as a result of speculative activities in the BDC and I & E segments of the foreign exchange market is expected to exert more pressure on the naira exchange rate.
Advertisement
Click to comment

Leave a Reply

CURRENCIES

Ripple considers moving to London

Ripple is considering moving its headquarters overseas due to the complexity in U.S regulations.

Published

on

Ripple, the $10 billion fintech juggernaut, popularly known for its crypto coin XRP is considering moving its headquarters overseas due to the complexity in U.S regulations affecting Crypto startups.

Ripple CEO Brad Garlinghouse, in a note toCNBC, disclosed that the  U.K. markets watchdog the Financial Conduct Authority doesn’t regard XRP security, he also added that other geopolitical regions had provided similar guarantees.

“What you see in the U.K. is a clear taxonomy, and the U.K.’s FCA took a leadership role in characterizing how we should think about these different assets and their use cases.

“The outcome of that was the clarity that XRP is not a security and is used as a currency. With that clarity, it would be advantageous for Ripple to operate in the U.K,” Garlinghouse said.

In addition to the U.K., Garlinghouse said Switzerland, Singapore, Japan, and the United Arab Emirates were also considered.

Why it’s happening; The fintech powerhouse had for months been battling with some crypto investors who accused it of selling unregistered securities and issuing misleading statements about XRP. The company denied the allegations, pushing back on the suggestion XRP qualifies as a security.

That said, the Ripple payments network, RippleNet, is now live in  55 countries including Nigeria, with XRP remittances now live in five continents. RippleNet also stated that its services offering were available in 95 currency pairs, according to the fintech’s redesigned website.

Quick fact; RippleNet is a network of institutional payment-providers that include banks and payment providers that use solutions developed by

  • Ripple provides a seamless experience to send money worldwide.RippleNet uses a leverage cutting-edge blockchain technology in streamlining payments services and helps in reducing costs.
  • It should also be added that On-Demand Liquidity (ODL), Ripple’s XRP-powered cross-border payments product is available in the US, Mexico, Europe, the Philippines, and Australia.
Continue Reading

CURRENCIES

Naira remains stable at black market, dollar supply up by 1183% despite curfew

At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N463/$1.

Published

on

Forex turnover improved significantly by 1183% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intraday trading on Thursday, October 22.

Also, the naira remained stable against the dollar, closing at N463/$1 at the parallel market on Thursday, October 22, 2020, as violence increases across the country despite the curfew.

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 Thursday. This was the same rate that it exchanged for on Wednesday, October 21.

  • 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 Thursday, closing at N386/$1.

  • This was the same rate that it exchanged for on Wednesday, October 21.
  • The opening indicative rate was N386.13 to a dollar on Thursday. This represents a 11 kobo gain when compared to the N386.24 that was recorded on Wednesday.
  • 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 increased significantly by 1182.9% on Thursday, October 22, 2020.

  • According to the data tracked from FMDQ, forex turnover rose from $6.05 million on Wednesday, October 21, 2020, to $77.62 million on Thursday, October 22, 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.
Continue Reading

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
Continue Reading
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

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 89 other subscribers

Trending