Naira to hold steady at all market segments on improved dollar supply

The Naira which appreciated in parallel market and interbank foreign exchange (FX) market is expected to hold steady this week as alternative dollar supplies improve.

The local currency on Friday, according to dealers appreciated against Dollar in parallel FX market by 0.22 per cent to close at N453.00 (N455 in other markets), but traded flat at interbank FX Market to close at N304.75.

Also, end of the week analysis revealed Naira holding ground against dollar in both markets, to appreciate by 1.31 per cent in parallel market and by 0.98 per cent in interbank FX market as against 2.96 per cent appreciation recorded in parallel market and 0.33per cent depreciation recorded in interbank market.

Market watchers believe that the continued sales of dollar to Bureau De Changes (BDCs) had played significant role in new trading pattern observed in the week. However, speculative tendency and scarcity of FX remain the driving factors depressing the value of Naira, while the currency is yet to find its support level as trading activities had indicated in both markets.

Dealers at Cowry Assets Management Limited said Central Bank of Nigeria, also sold around US$314 million in a two-month forward auction to clear backlog of dollar demand meant for payment of matured obligations for importation of raw materials, machineries and equipment, and spare parts in the agricultural and industrial sectors; ticket sales remittances for airlines, as well as to finance new letters of credit (LCs).

Also, following weekly U.S dollar sales by International Money Transfer Operator (IMTO), Travelex, to BDC’s, the Naira strengthened against the Greenback at the BDC and parallel (black) market segments by 2.20 per cent and 1.09 per cent to N445/USD and N455/US$ respectively.

So far, post flexible FX regime analysis revealed that Naira had lost 8.12 per cent and 31.30 per cent in value at both interbank and parallel markets respectively, as at end of trading session today. The trading gap or spread between the interbank and parallel market sheds weight to close lower at 48.65 per cent as against 49.14 per cent recorded in previous week.