Naira drops to N462 on liquidity

By Olumide David

The naira currency fell by 0.18 percent against the dollar as the foreign exchange recorded low liquidity.

After trading on Monday, the naira/dollar exchange rate closed at N462/1$ as against N461.17/1$ closed on Friday at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market.

Most of the currency dealers who participated at the FX auction on Monday maintained bids between N446.00 (low) and N462.05 (high) per dollar, data from the FMDQ indicated.

The daily foreign exchange market turnover, which reflects the level of liquidity in the market declined to $54,37 million.

This represents a 50.69 percent decline over $110.27 million recorded on Thursday last week, the data showed.

Also at the parallel market, popularly called black market, there was no trading in some areas as a result of political tension, so there was no direction for exchange rate, a trader said.

Last week, dollar depreciated 65bps week/week against the Naira to N765.00/$1.00.

At the I&E window last week, activity level fell 27.0 percent w/w to $362.6 million. Also, the base currency (dollar) depreciated 2bps w/w against the price currency (Naira) to N461.17/$1.00, a report by Afrinvest Securities limited said.

Oil prices, according to the report, took a beating last week (down 1.3 w/w to $81.93/bbl) despite the news of Russian production cut and China’s improved demand. On the home front, external reserves fell 19bps w/w to $36.7bn as of February 21, 2023.

The report noted that activity level at the FMDQ Securities Exchange FX Contract Market improved last week as the total value of open contracts rose 32.3 percent to $4.7 billion.

Analysts at FMDQ expect the Naira to trade within a similar band in both market segments this week, driven by reduced speculation amid shortage of Naira notes in circulation.