Naira witnesses marginal loss as weekly FX inflows decline
The naira on Monday recorded a marginal loss against the dollar across foreign exchange (FX) markets, following a decline in weekly inflows.
Data from the Central Bank of Nigeria (CBN) showed that after trading, the naira closed at N1,470.26 per dollar, representing a 0.3 percent depreciation from N1,465.67 quoted on Friday at the Nigerian Foreign Exchange Market (NFEM).
At the parallel market, also known as the black market, the local currency weakened by N25, with the dollar quoted at N1,485 on Monday compared to N1,460 at the close of trading on Friday.
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Activity levels also moderated slightly at the NFEM window, where total FX inflows stood at $835.60 million, lower than the $1.18 billion recorded in the previous week, according to a report by Coronation Merchant Bank.
By composition, foreign portfolio investors (FPIs) contributed the largest share of inflows at $259.11 million (31 percent), followed by exporters at 20.3 percent, foreign direct investments at 19.9 percent, non-bank corporates at 8.9 percent, the CBN at 14.89 percent, and other sources at 12.2 percent.
Despite the decline in inflows, Nigeria’s gross external reserves recorded a slight uptick, rising by 0.36 percent week-on-week, or $150.99 million, to $42.41 billion.
Analysts at Coronation Research said, “We expect the naira to maintain its positive trajectory across FX segments this week, underpinned by CBN support and foreign inflows, barring any external domestic or global shocks.”
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Last week, the naira strengthened across both the official and parallel markets, supported by sustained CBN interventions and steady foreign inflows. At the NFEM window, the local currency appreciated by 1.02 percent week-on-week to close at N1,465.68 per dollar, while in the parallel market, it advanced by 2.75 percent to N1,455 per dollar.
Consequently, the gap between the two markets narrowed to -N10.68, representing a 0.73 percent premium on the official market rate, from N14.34 a week earlier, as speculative activities eased amid the typical seasonal demand surge associated with the start of a new academic year and the end of the summer holiday period.
