The Naira continued its upward trend Wednesday, reaching its highest level in seven months in the parallel market, where it rose to N1,500 per dollar from N1,530 last weekend. The Naira last went below N1,500 per dollar in the parallel market on Friday, June 21st, last year, when it traded at N1495 per dollar.
However, the Naira fell to N1,504 per dollar on the Nigerian Foreign Exchange Market (NFEM). According to data issued by the Central Bank of Nigeria (CBN), the naira’s indicative exchange rate increased to N1,504 per dollar from N1,502.5 per dollar last weekend, indicating a N1.5 depreciation.
As a result, and for the first time in a long time, the parallel market exchange rate was lower than the official market exchange rate, while the gap between the two prices decreased to negative N4 per dollar from N27.5 per dollar last week Friday. Analysts at Cardinalstone Research confirmed this development in yesterday’s forex market review, saying: “The FMDQ FX rate depreciated by 0.17 percent to N1,503.63 per dollar, while the parallel market rate appreciated by 0.67 percent to settle at N1,500.00 per dollar.”
As a result of this event, the Naira has appreciated by 9.4% and 2.2% year to date (YtD) in the parallel and official markets, respectively, from N1655 per dollar and N1538.5 per dollar at the end of last year. Currency traders who talked with Vanguard attributed the Naira’s continued gain to increased dollar supply amid heavy demand.
Mr. Yinusa Sadiq, a currency broker, said that the Naira has been strengthening since last week due to increasing dollar supply, despite the fact that customer demand remains high. “You now have simple access to dollars through banks and Bureau de Change. As people sell and buy.
The dollar closed today at N1510 to N1,500. I bought a dollar for N1,490 today.” Mr. Rasaq Bello, a currency broker, predicted that the Naira would continue to strengthen and remain constant between N1,490 and N1,500 per dollar as dollar supply increased. “If there is continuous increase in dollar supply, I see the foreign exchange rate stabilising between N1,490 per dollar and N1,500 per dollar this week.”
Similarly, analysts at CowryAsset Management Limited predict the naira to trade steadily versus the dollar this week. “This week, the naira is expected to trade in a relatively stable range, assuming no significant market distortions.” “Market dynamics will continue to shape the supply and demand for the dollar, influencing the local currency’s performance across various exchange segments.”
