Naira rallies at black market as speculators continue dollar dump

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CURRENCIESNaira rallies at black market as speculators continue dollar dump

The Naira appreciated against the dollar to close at N440/$1 on Tuesday.

Published 1 day ago on September 2, 2020 By Chike Olisah Forex, Nafex, parallel market, exchange rate, Naira, Dollar

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Nigeria’s exchange rate at the NAFEX window depreciated to close at N386 during intraday trading on Tuesday, September 1, 2020. In sharp contrast, the exchange rate at the parallel market recorded another record gain on Tuesday as it closed at N440/$1.

Market Watch

Parallel Market: At the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N440/$1 on Tuesday, according to information from Abokifx, a prominent FX tracking website. This represents a N25 gain when compared to the N465/$1 that it exchanged on Monday, August 31.

Nairametrics Research checks reveal despite offering a bid price some traders fail to turn up to to buy leaving sellers stranded.

READ: Flour Mills to issue bond within 2 months as it takes advantage of market rate

NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N386/$1.

This represents a 33 kobo drop when compared to the N385.67 that it exchanged on Monday, August 31, 2020.

The opening indicative rate was N386.03 to a dollar on Tuesday. This represents a 47 kobo gain when compared to the N386.50 to a dollar that was recorded on Monday.

The N395.13 to a dollar is the highest rate during intraday trading before closing at N386. It also sold for as low as N380/$1 during intraday trading.

READ: ABCON explains how to stop naira depreciation

Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window rose significantly by 307% on Tuesday, September 1, 2020, as it continued with the gain that was recorded the previous trading day.

According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $14.37 million on Monday, August 31, 2020, to $58.46 million on Tuesday, September 1, 2020.

This represents a second consecutive trading day of increase in turnover following improved dollar liquidity.

Despite improved liquidity, the volatility of the foreign exchange market still persists. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.

The average daily forex sale for last week was about $23.19 million which represents a significant drop from the $71.13 million that was recorded the previous week. The day’s FX turnover is still a far cry from the $200 million mark that was recorded sometime 2 weeks ago.

Total forex trading at the NAFEX window in the month of August was about $857 million compared to $937 million in July.

The exchange rate disparity between the official NAFEX rate and the black-market rate has continued to reduce significantly these past few days dropping to N54.

READ: CBN announces resumption of sales of forex to BDC

The central bank moved towards exchange rate unification three weeks ago after it devalued the official rate to N380/$1.

The local currency has been strengthened especially in the black market as the Central Bank of Nigeria introduces some measures targeted at exporters and importers in order to try to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.

The resumption of sales of forex to BDCs will inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.

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RELATED TOPICS:CENTRAL BANK OF NIGERIAEXCHANGE RATEFOREXNAFEXNAIRANIGERIA NEWS

Chike Olisah Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- chike.olisah@nairametrics.com.CLICK TO COMMENT

CURRENCIESDaily Parallel Market Exchange Rate – ₦440/$1

The US dollar stands at ₦440/US$1 in the parallel market

Published 2 hours ago on September 3, 2020 By Samuel Oyekanmi Forex, NIGERIA: Daily Parallel Market, Exchange Rate

The exchange rate between the naira and the US dollar for today (Thursday, September 3rd 2020), stands at ₦440/US$1 in the parallel market. The rate had also closed at ₦440/US$1 yesterday Wednesday, 2nd September 2020.

Naira: ₦440

Dollar: $1

Date: September 3rd, 2020

The exchange rate between the naira and the British pound sterling stands at ₦580/₤1 on Thursday, 3rd September, same as recorded on Wednesday, 2nd September 2020.

Naira: ₦580

Pounds Sterling: ₤1

Date: September 3rd, 2020

Explore Economic Research Data From Nairametrics on Nairalytics

The exchange rate between the naira and the European euro stands at ₦535/€1 on Thursday, 3rd September 2020. The exchange rate had also closed at ₦535/€1 on Wednesday, 2nd September 2020.

Naira: ₦535

Euro: €1

Date: September 3rd, 2020

Activity: US Dollar stands at ₦440/US$1 in the parallel market

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READ ALSO: The risk of buying Forex at black market rate of N460/$1

Show entriesSearch:

Date Currency Buy(AM) Sell(AM) Buy(PM) Sell(PM) Volatility

9/3/2020 Dollar 425 440

9/3/2020 Pounds 560 580

9/3/2020 Euro 520 535

9/2/2020 Dollar 425 440 425 440 Low

9/2/2020 Pounds 570 580 560 580 Low

9/2/2020 Euro 535 540 520 535 Low

9/1/2020 Dollar 462 465 435 440 High

9/1/2020 Pounds 565 575 570 580 Low

9/1/2020 Euro 535 540 535 540 Low

8/31/2020 Dollar 463 470 460 465 HighShowing 1 to 10 of 1,023 entriesPreviousNext

Data is collated from various black market dealers on the mainland and island parts of Lagos State where forex is sold. The price quoted daily on this page represents the average price obtained by our Research Team. Our prices are a guide and could be slightly different from the price you get when you eventually decide to buy or sell. This is a daily tracker and updated close of business. See table below for parallel market exchange rate dating to 2019.

CONTINUE READING CURRENCIESWhy currency traders are now buying U.S dollars

Many currency traders believe that the U.S dollar index is showing an oversold signal.

Published 5 hours ago on September 3, 2020 By Olumide Adesina parallel market, greenback, U.S dollar rises against major currencies, U.S and China’s economic data support the dollar, U.S dollar gains ground, U.S. President Trump boosts investors’ Optimism, Exchange rate stabilizes across forex markets as CBN moves against abuse by dealers

Currency traders were relatively bullish in trading the US dollar at London’s trading session on Thursday.

The US dollar index that is used to track the U.S dollar against major global currency peers, was up 0.11% to trade at 92.933 earlier on Thursday.

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Why currency traders are going bullish on the dollar now

In spite of the world’s largest economy having a surge in COVID-19 caseloads, many currency traders believe that the U.S dollar index is showing an oversold signal, meaning that any time the value of the safe-haven currency drops below the 92.250 support level, traders increase their long positions.

Also, it should be noted that the United States in recent weeks, has been printing impressive economic data; this crucial macro tells forex traders that the worst of the COVID-19 onslaught is definitely over.

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However, traders are waiting in the long term for the U.S election scheduled to hold in November for a clearer view on the safe currency horizon.

READ: President Trump dumps plan to force foreign students to leave the US

That said, if President Trump wins this crucial election, it is believed, a stronger dollar will come to play. This is coming on the basis that the recent dollar weakness is really a vote of confidence on the US, particularly on the success of President Trump as he had been able to keep the U.S index value above 97.5 relatively, until the onset of COVID-19 pandemic.

US Dollar currency index

Quick fact: The U.S. Dollar Index tracks the American dollar against other major currencies such as the Japanese Yen, British Pound Sterling, Swedish Krona, the Euro, and more. Individuals hoping to meet foreign exchange payment obligations, via dollar transactions to European countries, and Japan, would need fewer dollars in meeting such obligations.

Stephen Innes, Chief Global Market Strategist at AxiCorp, in an explanatory note to Nairametrics, gave vital insights on the EUR/USD pair.

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“A decisive shift in the narrative in the Euro is unfolding, and the price action might not entirely be caught up to the new storyline just yet.

“The EURUSD is still grinding up the channel, but the narrative is less bullish than after the significant bull target of 1.2000 was soundly rejected.

first bank

“I guess that EURUSD grinds lower into the ECB meeting as the market reduces significant length into what is becoming an obvious event risk. The attraction of a dovish Fed on September 16 might not be strong enough to offset the ECB’s downside risks on September 10.

“As far as the US Fed is concerned, I do not think they were anywhere near as dovish as the market read. September easing looks possible but not likely, suggesting the Fed’s sense of urgency feels lower than it did a few weeks ago as both housing and manufacturing are booming.”

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However, in the short term, currency traders remain in a holding pattern ahead of Friday’s Non-Farm Payroll (NFP).

CONTINUE READING CURRENCIESTo test FX market, CBN pumps $50 million

$50 million was sold to foreign investors on the spot and forward market.

Published 6 hours ago on September 3, 2020 By Nairametrics To test FX market, CBN pumps $50 million, CBN issues guidelines to Finance Institutions on establishment of Subsidiaries and SPVs, CBN injects $2.63 billion to defend naira in one month, CBN’s COVID-19 N50 billion targeted credit facility, CBN’s heterodox policies buoys credit growth

Nigeria’s central bank pumped in $50 million into the FX market on Monday in a bid to test demand and supply and more importantly, the price of naira against the dollar.

According to Reuters, $50 million was sold to foreign investors on the spot and forward market in what it termed a “test trade to gauge the level of dollar demand” in the market.

READ: With nowhere to invest, Nigerians keep N36 trillion in banks and low yielding assets

The exchange rate has fallen from N477/$1 on Friday to as low as N440/$1 on the average across parallel markets as forex speculators scamper to take profits ahead of further dollar liquidity in the system.

Nigeria’s exchange rate at the NAFEX window remained stable at N386 during intraday trading on Wednesday, September 2, 2020. In a related development, the exchange rate at the parallel market also remained on Wednesday as it closed at N440/$1 after yesterday’s significant gain.

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READ: CBN set to punish exporters who re

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