By Kayode Tokede
Naira at the parallel market closes flat at N462 against the Dollar on Thursday.
While the Naira appreciated by 0.67per cent to close at N596 against the Pound, it closed flat at N540 against the Euro.
At the Investors & Exporters Foreign Exchange (I &E FX) window, while the Naira closed down by 0.45per cent and 0.75per cent against the Pound and Euro to close at N498.08 and N450.98 respectively, it gained 0.04per cent against the Dollar to close at N385.83.
According to FMDQ Exchange, foreign exchange turnover at the I&E window closed on Thursday at $166.55 million
According to the data tracked from FMDQ, foreign exchange turnover dropped from $79.53 million on Tuesday, to $29.53million on Wednesday.
The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
The drop in foreign exchange supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
The local currency has strengthened by about 7.8per cent within the last one week at the parallel market, as the Central Bank of Nigeria (CBN) introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for foreign exchange by traders.
The CBN has sold over $450 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
“Going forward, we expect the FX market to be dictated by heightened dollar demand and CBN FX policies,” analysts at InvestmentOne research explained.
However, the money market rates declined today as Open Buy Back and Overnight rates decreased by 42basis points and 46 basis points to close at 1.33per cent and 2.17 per cent respectively.
The bond market was positive today aa yields declined across most maturities. We witnessed the yields on the 5yr, 7yr and 10yr benchmark bonds decline by 19 basis points, 103 basis points and 72 basis points to 3.81%, 4.76% and 5.59 per cent respectively.
In the near term, we expect market activity to be influenced by liquidity levels and foreign investor participation.