The Naira in Nigeria increased to N806.73 to the Dollar at the official foreign exchange (FX) market, compared to the closing rate of N837.77.
According to dealers, the moderation in Dollar demand at the official foreign exchange market preceded the appreciation of the local currency.
According to data from the FMDQ, the Dollar was quoted at N837.77 at the close of trading, which was stronger than the N927.19 quoted at the Autonomous Foreign Exchange Market (NAFEM).
In spot trading, willing sellers and willing buyers quoted Dollars at a bid rate of N1,021, which was higher than the N1,160/USD 1 offered. At N701 per Dollar on the spot, the lower bid rate did not change.
As the daily foreign exchange market turnover fell by 32.87% to USD 73.93 million from USD 110.14 million, the supply of Dollars declined. Similarly, the naira closed at N1,165 to the USD, the same exchange rate, marking a day of stability.
Afrinvest (West) Africa Limited, an investment banking and research firm, noted in a note to clients that the CBN’s foreign reserves decreased by 1.1% month (m/m) in November to close at USD 33.0 billion due to ongoing pressure from the foreign exchange (FX) demand-supply imbalance.
In the meantime, the NAFEM and parallel market segments saw different performances from the naira in the currency market segment.
At the end of November, the price currency (Naira) in the NAFEM segment fell by 2.1% month over month relative to the base currency to N832.32/ USD 1. The Naira gained 0.9% m/m value against the US Dollar in the parallel market, reaching N1150.00/USD 1.
Unless there are notable shifts in the liquidity of the market, the Naira is expected to move in a similar range across FX segments in the future.
Additionally, FSDH research noted in its equity research note that the recent uptick in NAFEM activity following increasingly alluring money market interest rates may persuade trade investors to make investments in Nigeria.