Market analysts have said they expect the naira to maintain its positive performance across FX segments after it gained 8.5 per cent in the parallel market at the end of February.
The currency had appreciated to N1,500/$1, marking a seven-month high in the parallel market, while the official exchange rate remained much lower at around N767.54/$1 in January.
On the official market, however, the naira fell 1.7% month-over-month (m/m) against the US dollar, closing at N1,500.15/$1 at the end of February. Conversely, the parallel market rate increased to N1,490/$1 at an annual rate of 8.5%.
Domestically, FX reserves fell 3.2% month-over-month to $38.46 billion, following a 7-week loss of $241.50 million week-over-week (w/w).
Concerns about growing US oil inventories, possible US-Russian talks that could lead to sanctions relief, Ukraine’s attack on the Caspian Pipeline Consortium in Russia, and worries about a new China-U.S. trade war that could intensify fears of slower economic growth were some of the factors that influenced the performance of the world oil market last month.
Consequently, the price of Brent crude oil fell 3.1% month over month to $73.7/bbl.
Abiodun Keripe, managing director of Afrinvest Consulting Limited, commented on the naira’s performance and attributed the official market’s decline to CBN’s efforts to stabilize the currency, specifically by resuming payments for the verified portion of the $7.0 billion foreign exchange backlog.
On their part, analysts with Cordros Research said,
Market distortions have decreased as a result of the notable narrowing of the difference between the official and parallel currency rates.
At the Monetary Policy Committee (MPC) meeting, Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), recently stated that the introduction of Bloomberg’s B matching system had increased transparency in the purchasing and selling of foreign exchange, and that the gap between the official rate and the BDCs had decreased to perhaps less than 1% as of the most recent count.
TimesNow.com.ng reported that In February, the naira made a significant resurgence and achieved one of its largest gains in recent months.
On the parallel market, the local currency started February at N1,640 to the US dollar and ended the month at N1,495 to the US dollar, a gain of N145.
The naira began the month of February at N1,620 and ended the month at N1,492 in the official market.
Source: TimesNow.com.ng
