Naira Strengthens Against Dollar: Official Market Hits N806.73/$, Parallel Window Stable

Nigeria’s Naira exhibited resilience, strengthening to N806.73 against the dollar in the official foreign exchange (FX) market on Tuesday, marking a significant improvement from its N837.77 close on Monday. The boost was attributed to a reduction in dollar demand within the official FX market, as reported by market dealers.

Monday’s close saw the dollar quoted at N837.77, surpassing the N927.19 quoted on Friday at the Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ.

Willing buyers and sellers engaged in dollar transactions at a bid rate of N1,021, demonstrating strength compared to the N1,160/$1 offered on Friday in spot trading. The lower bid rate held steady at N701 per dollar on the spot.

Dollar supply experienced a decline on Monday, with the daily foreign exchange market turnover decreasing by 32.87 percent to $73.93 million, down from $110.14 million recorded on Friday.

Tuesday witnessed the Naira maintaining stability, closing at N1,165 to the US dollar, the same rate as on Monday.

Afrinvest (West) Africa Limited noted in a client update that the FX demand-supply imbalance continued to impact the CBN foreign reserves, leading to a 1.1 percent month-on-month decline in November, closing at US$33.0 billion.

In the currency market segment, the Naira showed a mixed performance in the NAFEM and parallel market. The NAFEM segment experienced a 2.1 percent weakening on a month-on-month basis, closing at ₦832.32/$1.00 by the end of November. Conversely, in the parallel market, the Naira appreciated by 0.9 percent m/m, reaching N1150.00/$1.00.

Looking ahead, market analysts anticipate the Naira to trade within a similar band across FX segments unless significant changes in market liquidity occur. FSDH Research, in its equity research note, acknowledged increased activity at the NAFEM, attributing it to rising interest rates in the money market, potentially attracting trade investors to bring investments into Nigeria.