Market News

Naira stays at 1,339.33/$ as FX turnover jumps to $328.32m - PUNCH

MAY 29, 2024

By Oluwakemi Abimbola

The Nigerian currency, Naira, stayed at 1,339.33 against the United States dollar for the second consecutive day on Tuesday, its strongest since April 26, 2024.

However, the foreign exchange turnover rose significantly from $180.80 million on Monday to $328.32 million at the close of trading on Tuesday, indicating 81.59 per cent appreciation, which signalled renewed activity and demand in the foreign currency market.

At the official currency window domiciled on the FMDQ platform, the naira traded at an intra-day high of 1,506/dollar (Monday: N1,501) and a low of 1,150/dollar, stronger than N1,310 to the dollar on Monday.

According to Bloomberg, the strengthening of the naira was linked to the intervention of the Central Bank of Nigeria in the forex market.

The naira, in the last few weeks, had been unstable, thus reversing most of the gains made in March on the back of improved dollar inflows.

The CBN Governor, Olayemi Cardoso had blamed the volatility on seasonal fluctuation during the post-Monetary Policy Committee meeting press briefing last Tuesday in Abuja.

“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply freely functioning market system,” Cardoso said.

With $1.30 billion worth of cleared USD/Naira-Settled Non-Deliverable Forwards open contracts expiring on Wednesday, analysts are of the view that the naira may be impacted, thus increasing the chances of the apex regulator sustained intervention.

At the Lagos Business School Breakfast meeting for May, the Managing Director, Financial Derivatives, Bismarck Rewane, had described the naira as a currency in desperate need of revival.

He said the naira was under pressure as a result of “Nigeria’s external imbalances caused by a disruption in oil production, drop in oil prices and speculative behaviour of market actors, negative trade balance (0.86 per cent of GDP) and regulatory arbitrage.”

To resolve the challenge with the naira, Rewane said there was a need for new money in the form of Eurobonds, which the fresh banking sector recapitalisation may be able to inject as well as increasing diaspora flows from $19bn to $25bn.

Meanwhile, the foreign reserves dropped to $32.69bn on Monday, lower than N32.73bn on Friday.


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