Naira Skids as FX Turnover, External Reserve Decline
The Nigerian local currency, the Naira, depreciated first time in weeks following a sharp declined forex turnover at the Nigerian autonomous foreign exchange market. The nation’s gross external reserves declined steeply ahead of government foreign currency bonds issuance in the secondary quarter of the year.
According to information obtained from FMDQ Securities Exchange, the naira depreciated by 1.1% to N1,148 per US dollar on Tuesday after successive rallies, from N1,136.04 per greenback.
Exchange rate has seen strong recovery across forex markets due to improved foreign currency supplied and increase confidence on ability of the central bank to sustain the ongoing FX reform.
Last week, official rate traded within the range of N1,100- 1,281.0 but closed at N1,142.4 in the spot market, Coronation Research said in its latest update – pointing towards an appreciation of +8.7% or N108.7.
In the forwards market, exchange rate was within the range of N1,235.0– N1,518.7. In the 1-month forward contract, the naira appreciated by +5.1 over the week to close at N1,212.8. Also, 3-month forward contract appreciated by +4.1% to close at N1,248.9 on Friday.
Citing data from FMDQ, analysts explained that total NAFEM turnover decreased by -35.3% or USD324.4 million to close at USD594.9 million on Friday.
Currency traders said the NAFEM window recorded an inflow of USD427.2 million. Though naira recorded steadied gains, there was no inflow from the Central Bank.
Foreign Portfolio Investors (FPIs) accounted for 39.7% of the total inflows, followed by 31.3% inflows from non-bank corporates in addition to 24.6% from exporters while others accounted for 4.4%.
Nigeria’s external reserves decreased by -2.5% to close at USD32.6 billion on Friday. Latest data from the apex bank showed the gross external reserve has dropped to $32.29 billion,
