Continued Demand for Dollar Weakens Naira at Forex Market

By Dipo Olowookere

The local currency could not put up a positive performance against the United States Dollar at the Investors & Exporters segment of the foreign exchange (forex) market this week.

This was mainly influenced by the persistence demand for the Greenback at the forex window during the trading week, which outweighed supply of the foreign currency.

At the close of week on Friday, the local currency was facing south by 0.19 percent against the Dollar, quoting at N364.70.

However, the Naira appreciated by 0.29 percent against the Dollar at the interbank segment of the market, closing at N359.81.

This growth, according to analysts at Cowry Asset, was buoyed by the weekly injections of $210 million into the market by the Central Bank of Nigeria (CBN).

Business Post reports that the $210 million was supplied into the foreign exchange market via the Secondary Market Intervention Sales (SMIS) on Wednesday.

A breakdown of the intervention showed that $100 million was allocated to Wholesale SMIS, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

At both the Bureau De Change (BDC) and parallel market segments, the local currency remained unchanged to finish at N361/$ and N364/$ respectively.

Meanwhile, the Naira depreciated further for most dated foreign exchange forward contracts at the interbank over-the-counter (OTC) segment – spot, 1 month, 2 months and 3 months lost 0.02 percent, 0.19 percent, 0.15 percent and 0.08 percent, to close at N306.75/$, N367.61/$, N370.94/$, N374.65/$ respectively.

However, the 6 months and 1 year FX contracts gained 0.02 percent and 0.45 percent, to close at N385.10/$ and N412.01/$ respectively.