The Naira opened the month of May on a negative note, trading at N1,360/$ at the parallel market, representing a slight decline of 0.74% from the naira-dollar exchange rate seen the previous day.
This change interrupted a two-day winning streak, sending uncertainty signals to investors and currency traders.
Based on data from the FMDQ official trading platform, the Naira gained N28.15 on the final trading day of April, settling at N1,390.96/$ as against N1,419/$ on April 29.
The positive trend was also reflected in trading volumes, with a 52.45% surge in forex turnover, reaching $225.36 million, up from the prior volume of $147.83 million.
However, compared with the beginning of April, the April 30 rate was a 5.8% depreciation from N1,309.39 seen on April 1.
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More Insights
- In the I&E window, the Nigerian Naira fluctuated, reaching a peak of N1,450 and a trough of N1,200.
- Against the British pound, the Naira depreciated by 4.71%, closing at an exchange rate of N1,700 from the N1,620 traded the previous day.
- In relation to the euro, the Naira fell by 1.38%, trading at N1,450, down from the previous session’s N1,430.
- The currency also weakened against the euro by 1.38%, trading at a rate of N1,450, a drop from the prior session’s N1,430.
- The forex market saw a surge in activity, with transaction volumes jumping 52.45% to $225.36 million, surpassing the prior figure of $147.83 million reported by NAFEM.
- The CBN reported a modest increase in reserves of 0.314%, with the total reserves climbing to $32.233 billion on April 29th from $32.152 billion on April 26th, marking a consistent upward trend over a span of four days.
Uncertainty hurts Naira
- The Naira rallied against the dollar in the first half of April owing to a cacophony of policies by the central bank. But depreciation set in by the middle of April as speculators leveraged the uncertainty to cut their own slice of the cake.
- Investors are seeking some form of certainty, but the volatility of the forex market has made it nearly impossible. The Central Bank of Nigeria (CBN)’s policies have been fully ineffective due to the forex demand pressure by travellers, students and manufacturers. The CBN is trying to boost forex supply, but also working on the demand side.
- “We can’t have foreign exchange in large quantity unless we start exporting finished goods,” said Prof Uche Nwogwugwu, Economics lecturer at Nnamdi Azikiwe University.
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