Naira records mixed performance in Official and parallel markets.

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The naira experienced a mixed performance in the official and parallel markets last week. At the National Foreign Exchange Market, the naira appreciated by 0.01% to close at 1,533.57/$, compared to 1,533.74/$ the previous week.

However, the parallel market told a different story, with the naira depreciating by 0.52% week-on-week to close at an average of 1,545/$1. This decline was attributed to a surge in forex demand amid illiquidity.

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According to Aminu Gwadabe, National President of the Association of Bureau De Change Operators of Nigeria, liquidity is the main challenge in the FX market. “I think the bottom line is liquidity. Yes, we are witnessing a spike in the market. So, that volatility has been there. Many other factors could be responsible. One, I think it’s liquidity; two, it’s the travellers’ demands and other drivers that are putting pressure on the naira,” he said.

Gwadabe also noted that the spread between the official market and the open market appears to be widening. “The spread between the official market and the open market appears to be widening,” he added.

Despite the challenges, experts at Cowry Asset Management Limited expect the naira to sustain its marginal gains in the coming week, supported by the Central Bank of Nigeria’s continued intervention in the foreign exchange market.

“We anticipate the naira to hold relatively steady, especially at the official window, barring any major shocks in global commodity or financial markets,” the weekly report noted. AIICO Capital also shares this view, citing the CBN’s ongoing refinement of existing policies and the announcement of clearing all outstanding FX forward contracts.

The CBN’s forensic audit of FX forward contracts uncovered significant irregularities, including company name discrepancies, sales higher than demand, and non-permissible items of import. The apex bank has announced that all valid FX contract claims have been paid and is considering legal action against violators

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