Naira falls again due to new demand for dollars from importers
The national currency, the naira, depreciated further on Monday in the parallel market on renewed demand for dollars, especially from importers, traders told BusinessDay.
After trading on the foreign exchange market commonly known as the black market, the naira closed at 668 naira to the dollar, representing a loss of 1.2% against the dollar.
The naira also depreciated at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market.
Therefore, after Monday’s trading, the Naira closed at 431 Naira/$, down 0.67% from the 428.12 Naira closed on Friday in the official market.
Most traders who participated in the FX auction held bids between N415.50 (low) and N444.00 (high) per dollar.
The foreign exchange market saw increased activity, with daily foreign exchange market turnover rising 60.83% to $115.67 million on Monday from $71.92 million recorded on Friday, the data showed. of the FMDQ.
Also Read: Naira overvalued by 200%, may be devalued – Rewane
According to the FSDH macroeconomic report, demand pressure and limited foreign exchange inflows triggered a depreciation of the naira, increasing the exchange rate premium.
Other factors responsible for the naira’s freefall include rising strong dollar, import demand, oil theft, fuel subsidies, currency speculation, record money supply and low productivity.
In the money market, the CBN is expected to renew maturing bills worth N150.62 billion at the Primary Market Auction (PMA) of NT-Bills in the tenors of 91, 182 and 364 days.
“We expect interest rates to rise across all maturities at this auction as investors patiently wait to invest,” analysts at Afrinvest Securities Limited said.
Analysts expect bearish sentiment to continue ahead of the PMA as investors cover unfilled bids towards the end of the week.
In addition, the system’s liquidity (which stood at N74.9 billion as of Friday, July 5, 2022) is expected to be bolstered by the maturing of NT-Bills worth N264.28 billion.
“We advise investors to trade cautiously ahead of the PMA outcome and take advantage of attractive full-curve bills as well as corporate offers,” the analysts said.