Naira strengthens at parallel market, gains 0.25% at NAFEX

The Nigerian currency, Naira, on Thursday, strengthened further to close at 366 per US Dollar against 367 sold on Wednesday at the parallel market, while extended its gains by 0.25 per cent at the Nigeria Autonomous Foreign Exchange Market (NAFEX) window.

The local currency, at the official foreign exchange market on Thursday, relapsed to close at a slight depreciated rate of 305.80, representing a decline of 0.15 per cent against rebounded rate of 305.35 traded on Wednesday.

But the Naira, which had depreciated to 367.60 earlier in the week at the Investors and Exporters FX window, otherwise known as NAFEX garner points on Thursday to open at a new rate of 365.13, representing an increase of 0.17 per cent and further recorded a better closing rate of 366.67 representing 0.25 per cent.

The Nigerian currency, however, remained unchanged at the unofficial market, against Pound Sterling and Euro at 470 and 420, respectively.

The local currency, at NAFEX, had traded at N362.21 per dollar on Monday, but closed at N363.57 per dollar, indicated N1.63 depreciation for the naira in contrast to the 50 kobo appreciation recorded on Monday, before closing at a more depreciated value of 367.60 on Wednesday.

The apex bank, on Monday had intervened in the official forex market with the supply of $195 million as part of efforts to stabilise the market, but to the surprise of forex dealers, the naira, depreciated but remained unchanged at the unofficial segment of the market.

Meanwhile, in its continued effort in achieving official and parallel market rate convergence, the apex bank has sold a total sum of $2.64 billion to authorised dealers in May 2017, its latest report has revealed.

The report showed that 70.8 per cent and 106.1 per cent increase above the levels in the preceding month and the corresponding period of 2016, respectively.

This development, however, attributed to the increase in inter-bank sales, matured forwards contracts and Bureau De Change (BDC) sales during the period under review.

According to the CBN’s report, “of the aggregate sales, forwards contracts disbursed at maturity were valued at $1.85 billion or 70.1 per cent of the total, while inter-bank sales amounted to $0.65 billion or 24.7 per cent. The balance of $0.14 billion or 5.2 per cent of the total was accounted for by sales to BDC.

“The Bank sustained its effort at ensuring exchange rate stability through interventions and implementation of policies to address supply bottlenecks and enhance liquidity in the foreign exchange market”, it stated.

Consequently, there was improvement in the exchange rate of the naira to major international currencies in the review period. The average exchange rate of the naira at the inter-bank segment, at N305.54 per US dollar, appreciated by 0.2 per cent relative to the level in the preceding month, but indicated a 35.5 per cent depreciation, below the level in the corresponding period of 2016.

Also, at the BDC segment of the market, the naira appreciated by 0.5 per cent, on a month-on-month basis, to N384.48 per US dollar, but indicated a 12.4 per cent depreciation relative to the rate in the corresponding period of 2016

As a result, the premium between the average inter-bank and BDC rates fell by 0.4 percentage point to 25.8 per cent in May 2017 below the level in April 2017

Stories by Motolani Oseni