Naira Maintains Stability At Forex Markets As Dollar Supply Rise By 57%

Forex liquidity by 57% as Nigeria’s exchange rate at the NAFEX window remained stable to close at N386/$1 during intraday trading on Monday, September 28.

Also, the naira remained stable for the third consecutive day at N467/$1 at the parallel market on Monday, September 28, 2020.

Forex liquidity improves by 57% as Nigeria’s exchange rate at the NAFEX window remained stable to close at N386/$1 during intraday trading on Monday, September 28.

Parallel market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N467/$1 on Monday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it was exchanged for on Friday, Septemeber 25.

Currency developments

The local currency has strengthened by about 7.8% within the last one week at the black market, as the 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 forex by traders.
The CBN has sold over $200 million to the BDCs since the resumed forex sales on Monday, September 7, 2020. This was expected to inject liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
We also noted that forex traders monitored during the previous week, appeared to hoard forex as they anticipated further depreciation in the market.
There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.
NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N386/$1.

This was the same rate that it exchanged for on Friday, September 25.
The opening indicative rate was N386.25 to a dollar on Monday. This is about the same rate that was recorded on Friday.
The N391.37 to a dollar is the highest rate during intraday trading, before closing at the rate of N386/$1. It also sold for as low as N384/$1 during intraday trading.
Forex turnover: Forex turnover at the Investor and Exporters (I&E) window, increased by 56.5% on Monday, September 28, 2020.

– Nairametrics