Naira slides to N441.67 as external reserves fall

The Nigerian naira depreciates by 29 kobo from N441.38 to N441.67 per the United States dollar at the Investors’ and Exporters’ foreign exchange window as demand pressures persist.
Analysts told MarketForces Africa that the exchange rate at the Investors window will worsen further as year-end imports by manufacturers and other corporates begin to gather momentum.
Last week, there was a noticeable decline in the gross external reserves, according to data from the Central Bank of Nigeria.
In the parallel market, exchange rates worsened amidst pre-election spending and declining foreign currencies inflow that follows low export earnings. Currencies analysts told MarketForces Africa that little foreign investment play will be seen in the domestic
Analysts at Cowry Asset Management observed that the local currency continues to lose at a time when some commercial banks are now placing restrictions on total FX accessible by users for personal traveling allowance (PTA) and business traveling allowance (BTA) purposes.
Exchange rates at the parallel market weakened to N750 per dollar from N743 in the prior week.
“As we draw closer to the election year and with the campaign activities by political parties taking full gear already, it is expected that the demand for the greenback will buoy further weakening of the legal tender”, Cowry Asset said in a market report.
At the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate traded quietly as it closed the week at N430 from last week’s close.
In the just concluded week, Nigeria’s gross external reserves decreased by $114.56 million to $37.68 billion, according to public data from the CBN website.
As of Thursday, the volume of dollars transacted at the Investors and Exporters FX window decreased by 6.4% from level seen at the beginning of the week to $282.42 million, with trades consummated within the N423.00 – N459.42 band.
On Friday, trading activity level at the Investors’ window improved week on week as total turnover increased 5.4 per cent or $18 million to $351.6 million.
In the Forwards market, the naira appreciated +0.2 per cent to N447.36 for a 1-month contract, strengthened by +0.3 per cent to N454.29 for a 3-month contract. Also, the 6-month forward contract gained +0.3 per cent to N471.43 while 1-year contract gained +0.2 per cent to N497.03.
Analysts said Naira is expected to trade within the range seen last week across foreign exchange segments, even as the FX demand-supply disparity persists.

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