Naira eases as NAFEX transactions hit $3.8bn in two months

Nigerian currency, Naira, on Monday, eased at the parallel segment of the foreign exchange market to close at 367 to a dollar against 370 sold over the weekend, as the Investors & Exporters FX widow, otherwise known as, NAFEX, recorded trading not less than $3.83 billion, since its establishment on April 24, forex traders revealed on Monday.

The Naira, at the unofficial forex market, also, appreciated to 414 per Euro compared to 420 traded on Friday, at the parallel segment of the foreign exchange market.

However, the Naira on the NAFEX window, opened at 364.56 and closed at 361.86, against 363.33 closed on Friday.

The local currency, at the official forex market, the local currency steady at 306 per dollar, the same rate it traded on Friday when the market closed officially for last week, which was a better rate compare to 306.20 exchanged the previous day.

But the naira at the unofficial market returned to profitability, as it recorded marginal gains against the dollar and Euro, but remained unchanged to the Pound sterling.

Consequently, forex traders were of the opinion that the newly introduced Nigerian autonomous foreign exchange rate fixing for foreign investors and exporters window, due to its new transaction record of $3.83 billion in less than three months of it creation will make naira sovereign and stronger in the market.

The window, which was introduced in April, was to attract foreign investors into the country and boost the supply of dollars.

Forex dealers, however, explained that the sum of $407 million were traded last week compared with $354.8 million in the previous week, indicating a gradual return in investors’ confidence to the Africa’s largest economy.

Before the window was introduced, the central bank was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.

Meanwhile, the convergence of foreign exchange rates, including the drop in the gap between the interbank rate and the bureau de change (BDC) from 150 per cent to 23 per cent have been lauded by the Central Bank of Nigeria (CBN) backed Monetary Policy Committee (MPC) members.

They also said that a margin of five per cent was sustainable in most jurisdictions. The BDC rate closed on Friday at N370/$1 while the interbank rate stood at around N316/$1.

Also, players in the retail segment of the Nigerian inter-bank foreign exchange market had on Friday received a $254.3 million boost from the CBN. It said release of the fund followed bids received from forex dealers by the apex bank.

Information obtained from the CBN indicates that the deals in the retail window represented requests from the various sectors in the Secondary Market Intervention Sales (SMIS), thereby providing a boost to the respective sectors.