Naira Struggles at NAFEM Despite $326.6m Boost in Reserves

A boost of $326.64 million that lifted Nigeria’s foreign reserves to $39.77 billion failed to pacify further depreciation of the naira at the official market last week ended November 1.

The local currency fell 4% week-on-week to close at N1,666.72 to a dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

High demand for the greenback further puts pressure on naira despite the intervention of the Central bank of Nigeria (CBN) at the official window, selling $77 million to authorised dealers to counterbalance rising dollar demands.

Total weekly  turnover at the NAFEM decreased by 50.0% to $771.23 million, with trades consummated within the N1,575.00/dollar – N1,690.00/dollar band.

In the forwards market, the naira rates decreased on the 1-month (-1.2% to N1,699.95/$) contract but increased across the 3-month (+1.3% to N1,732.09/$), 6-month (+1.0% to N1,848.62/$) and 1-year (+3.0% to N2,024.79/$) contracts.
Market experts expect the naira to remain under pressure in the near term, given the  sustained demand pressure in the FX market, CBN’s limited capacity to sufficiently intervene across the market segments and suboptimal inflows from Foreign Portfolio Investors (FPIs).