Naira Trades Flat as Rand, Kenya Shilling Weaken In First Trading Day

Unlike its peers in South Africa and Kenya, the Nigerian naira started the year’s trading flat at both the interbank and parallel market end. The naira which had shamed predictions that it will close 2016 above N500 to the dollar at the open market sold at N490 to the dollar yesterday, the same rate it sold at the close of business last year.
At the interbank end of the foreign exchange market, the naira the same rate it closed at on the last working day of 2016. The currency initially traded at N315.50 to the dollar but gained after the central bank sold $1.5 million in the market.
The Kenyan shilling had weakened on yesterday as importers sought to fill their dollar requirements after the holidays. An increase in the price of oil in global markets was also having an impact since Kenya is a net importer as commercial banks posted the shilling at 102.75/85, down from 102.55/65 at the close of trade on Friday. Tuesday was the first trading session of the year.
Also, the South African rand opened the first session of the new year weaker as the dollar gained against most major currencies. The rand traded at 13.7500 versus the greenback, 0.31 percent down from its New York close on December 30.
United Capital in a research note to clients said “in the week ahead, we expect pressure on the naira to linger, especially at the parallel market, as unmet demand from the official market continues to stoke imbalances.”
The naira lost around a third of its official value against the dollar in 2016 and the stock market declined 6.17 percent over the same period, reflecting a slump in Africa’s largest economy.

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