Economy
FX Speculators Count Losses as Naira Appreciation Exceeds Expectations
By Adedapo Adesanya
Speculators in the Nigerian foreign exchange (forex) market are counting losses with the Naira appreciating heavily against the greenback across several windows in the last few days.
The development has been tied to the new foreign exchange framework introduced by the Central Bank of Nigeria (CBN) recently as well as inflows from Nigerians living in the diaspora who are returning to the country for the festive season.
The apex bank had on Monday, December 2, launched the Electronic Foreign Exchange Matching System (EFEMS), an electronic platform introduced to tackle speculation and improve transparency in Nigeria’s foreign exchange market.
In a circular announcing the EFEMS platform, the apex bank explained that it facilitates spot foreign exchange transactions between the Naira and the US Dollar.
The platform, operated through Bloomberg’s BMatch system, requires a minimum trade value of $100,000, with incremental trade sizes of $50,000.
CBN also stated that the platform automatically matches buy and sell orders, promoting fairness and efficiency in FX trading.
The EFEMS system allows authorized dealers, including commercial banks, to place buy and sell orders in real time.
Transactions are automatically matched based on predetermined rules, ensuring swift execution and real-time visibility for market participants and regulators.
This has started bearing fruits with early signals indicating that speculators holding foreign currencies, particularly the US Dollar, have seen the value of their money drastically drop due to the appreciation of the local currency.
This is now forcing them to dump FX into the system and take the domestic currency alternative.
Business Post reports the Naira recorded a 3.3 per cent or N52.80 appreciation on the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, December 9 to close at N1,552.50/$1 compared with the preceding session’s rate of N1,605.30/$1.
This is also seen in the parallel market with the local currency trading within a low of N1,590 per Dollar to N1,630/$1 on Tuesday afternoon.
This newspaper also learned that many speculators are offloading their foreign currencies in panic for the local currency to avoid losses, which might ease the pressure, but there are fears that the demand for FX might happen after the holidays.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped 0.37 per cent on Thursday, January 9 as investors booked profit in Geo-Fluids and FrieslandCampina Wamco Nigeria Plc.
The sell-offs in the two securities brought down the value of the bourse by N4.13 billion at the close of business to N1.052 trillion from N1.056 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) made a loss of 12.05 points to wrap the session at 3,069.86 points compared with 3,081.91 points recorded at the previous session.
There were two price losers and three price gainers at the Thursday session, indicating a weak investor sentiment.
Geo-Fluids depleted by 25 Kobo to close at N4.60 per unit compared with midweek’s price of N4.85 per unit and FrieslandCampina Wamco Nigeria Plc went down by N1.78 to trade at N38.22 per share versus Wednesday’s value of N40.00 per share.
Conversely, Industrial and General Insurance (IGI) Plc appreciated by 2 Kobo to end at 24 Kobo per unit compared with the preceding day’s 22 Kobo per unit, UBN Property Plc gained 2 Kobo to close at N2.00 per share versus N1.98 per share, and Afriland Properties Plc expanded by 1 Kobo to N16.01 per unit from N16.01 per unit.
The volume of trades recorded yesterday increased by 82.9 per cent to 6.6 million units from 3.6 million units, but the value of transactions declined by 24.8 per cent to N27.5 million from N36.6 million, and the number of deals went up by 157 per cent to 36 deals from the 14 deals.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, 11 Plc came next with 12,963 units valued at N3.2 million, and Industrial and General Insurance (IGI )Plc was in third with 10.7 million units sold for N2.1 million.
IGI Plc closed the day as the most active stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, FrieslandCampina Wamco Nigeria Plc came next with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc occupied the third spot with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
Pressure eased on the Naira on Thursday, January 9, in the Nigerian Autonomous Foreign Exchange Market (NAFEM) segment of the currency market.
It was the first time the local currency was appreciating against the United States Dollar in the official market this week.
The value of the Naira improved against the greenback yesterday by 0.03 per cent or 47 Kobo to sell for N1,541.23/$1 compared with the preceding day’s N1,541.70/$1.
Equally, the domestic currency gained against the Pound Sterling in the spot market during the trading session by N41.11 to quote at N1,858.51/£1, in contrast to Wednesday’s closing price of N1,899.62/£1 and improved its value against the Euro at NAFEM by N5.78 to trade at N1,589.29/€1 versus N1,584.96/€1.
As for the black market, the Nigerian Naira was stable against the Dollar on Thursday as it remained unchanged at N1,650/$1.
In the cryptocurrency market, profit-taking continued after a major fourth-quarter 2024 rally spurred by Donald Trump’s November victory and the hope of a friendlier regulatory environment out of Washington DC.
Also supporting the market was the US Federal Reserve having cut its overnight interest rate by 100 basis points since September. However, that has been cut out after a series of economic reports showed the US economy and inflation have been far stronger than markets and the US central bank expected.
Bitcoin (BTC) went down yesterday by 0.03 per cent to finish at $94,130.63, Dogecoin (DOGE) recorded a value depreciation of 1.9 per cent to sell at $0.3314, Ripple (XRP) also slumped by 1.9 per cent to $2.30, Solana (SOL) fell 1.7 per cent to trade at $190.50, Ethereum (ETH) dropped 1.5 per cent to end at $3,268.93, and Binance Coin (BNB) went south 0.9 per cent to settle at $692.52.
On the flip side, Litecoin (LTC) increased its price by 1.9 per cent end at $104.26 and Cardano (ADA) leapt by 0.6 per cent to close at $0.9359, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
Oil prices rose more than 1 per cent on Thursday as cold weather affected some parts of the United States and Europe, boosting winter fuel demand.
Yesterday, Brent crude futures were up by 76 cents or 1 per cent at $76.92 a barrel and the US West Texas Intermediate (WTI) crude futures grew by 60 cents or 0.82 per cent to $73.92 per barrel.
In some US states like Texas and Virginia, there were reports of winter storm warnings on Thursday and this has led to diesel futures trading at their highest levels since early October 2024.
Analysts estimated that for the US, Europe and Japan, for every degree Fahrenheit, the temperature drops below its 10-year average, it translates to an increase of 113,000 barrels per day in demand for heating oil and propane.
Extreme winter conditions can lead to disruptions in oil supplies as freezing temperatures may cause temporary freeze-offs and production cuts.
Meanwhile, in his last days as US President, Mr Joe Biden will announce new sanctions targeting Russia’s economy.
The administration is trying to bolster Ukraine’s war effort against Russia before President-elect Donald Trump takes office on January 20. A key target of sanctions so far has been Russia’s oil industry.
The second coming of Mr Trump to the White House has sparked crude oil traders are buying more oil futures due to possible sanctions on Iran and tariffs.
The President-elect has made no secret of his attitude toward Iran, and he demonstrated that during his first term when he withdrew the largest oil producer from the Joint Comprehensive Plan of Action, commonly referred to as the Iran nuclear deal, and slapped back sanctions that the JCPOA had put an end to previously.
The Biden administration that took over in 2020 did not pay as much attention to Iran and sanction enforcement.
As a result, Iran boosted both its production of crude oil and exports, with the latter jumping by over 10 per cent in 2024 to a total of 587 million barrels.
With sanctions in place, the majority of Iran’s barrels went to China, a move that suggests that whatever way Mr Trump chooses to tighten sanction enforcement, it would have an impact on US-Chinese relations.
Pressure came as the US Dollar strengthened further on Thursday.
A stronger makes oil expensive for holders of other currencies, making prices weaker.
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