Naira records 7-month appreciation at N1,500/$ in parallel market

Naira records 7-month appreciation at N1,500/$ in parallel market

The Naira yesterday sustained its upward trend rising to its highest level in seven months in the parallel market, where it appreciated to N1,500 per dollar from N1,530 per dollar last weekend.

The last time the Naira traded below N1,500 per dollar in the parallel market was Friday June 21st last year when it traded at N1495 per dollar.

But the Naira depreciated to N1,504 per dollar in the Nigerian Foreign Exchange Market (NFEM).

Data published by the Central Bank of Nigeria, CBN, showed that the indicative exchange rate for the naira rose to N1,504 per dollar from N1,502.5 per dollar last weekend, indicating N1.5 depreciation for the naira.

Consequently, and for the first time in a long while, the parallel market exchange rate was lower than the official market exchange rate, while the gap between the two rates dropped to minus N4 per dollar from N27.5 per dollar last week Friday.

Also confirming this development, analysts at Cardinalstone Research the company’s forex market review yesterday, said: “The FMDQ FX rate depreciated by 0.17 per cent to N1,503.63 per dollar, while the parallel market rate appreciated by 0.67 per cent to settle at N1,500.00 per dollar.”

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As a result of this development, the Naira has recorded 9.4 per cent and 2.2 per cent Year-to-Date, YtD, appreciation in the parallel and official market from N1655 per dollar and N1538.5 per dollar from the close of last year.

Currency traders who spoke to Vanguard attributed the continuous appreciation of the Naira to improved dollar supply amidst high demand.

Speaking to Vanguard, a currency dealer, Mr. Yinusa Sadiq said: “The Naira has been appreciating since last week following increased dollar supply even when customer demand remains high.

“You now have easy access to dollars from the banks and Bureau de Change. As people are selling and they also are buying. The dollar was traded today closing at N1510 to N1,500. I bought a dollar at N1,490 today“

Mr. Rasaq Bello , a currency trader, projected the Naira will appreciate further and remain stable between N1,490 and N1,500 per dollar following continuous rise in dollar supply.

“If there is continuous increase in dollar supply, I see the foreign exchange rate stabilising between N1,490 per dollar and N1,500 per dollar this week.”

Similarly, in their foreign exchange outlook for this week, analysts at CowryAsset Management Limited expect the naira to trade at a stable pace against the dollar.

“This week, the naira is expected to trade within a relatively stable range, provided there are no significant market distortions.