Following less demand pressures at the foreign exchange (forex) market, the naira appears to have stabilized at N461.67 per the United States (US) dollar in the Investors & Exporters window of the market.
The rate became steady after market data shows that the dollar volume transacted at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) market declined by about 21%, according to market data.
For 2023, there are downsides to the exchange rate, and the possible upside potential is lacking strongly due to foreign currency scarcity in the local economy. However, the shortage of hot monies has helped position financial market in a much better way.
Though, there is a possibility that foreign receipts will improve in the coming days as Nigeria ramps up crude oil production to 1.44 million barrels per day in December, according to the Organization of Petroleum Exporting Countries (OPEC) data.
However, dollar demand for pre-election spending and invincible payments is expected to peak in the first quarter, settling a rude outing for exchange projection among forex analysts sampled by MarketForces Africa.
Channel checks show that the Naira fell by 0.13 per cent to N743 from N742. The forex market analysts still hope to see a fresh devaluation of the local currency which they believe is trading above its fair value at the NAFEX market.
Late week, the NAFEX rate traded within the range of N425.0-462 but closed at N461.7 per dollar on Friday. This points towards a depreciation of -0.04 per cent or N0.2 In the forwards market, the naira traded within the range of N461.0-477.7.
In the 1-month contract, the spot rate depreciated by -0.5 per cent to close at N470.40; in the 3- month contract, forex appreciated by +0.1 per cent to close at N479.5 at weekend.
In the retail secondary market intervention sales (SMIS) market, the forex spot rate remained unchanged at N445 PER United States dollar on Friday. >>>Naira Steadies as Banks Issue Update on forex Purchase.
At an open market rate of N731 last week, the gap between the NAFEX and the parallel market rate is 58.3 per cent. Citing data from FMDQ, Coronation Research said NAFEX turnover declined by 20.9 per cent to $590.2 million.
