Naira Recovers to N1,330.87/$ at NFEM as Forex Turnover Hits $619m

By BUKOLA ARO-LAMBO and DEBORAH BELLO, Lagos

The naira recovered some of its losses against the dollar on Tuesday, trading at N1,330.87 per dollar at the Nigerian Foreign Exchange Market (NFEM), after weakening to N1,331.69 on Monday.

The currency gained 82 kobo on Tuesday, following Monday’s N1.59 depreciation from last week Friday’s NFEM rate of N1,330.10.

Trading activity was stronger at the start of the week, with NFEM turnover reaching $619.22 million on Monday, the highest daily level since September 23 and about 35 per cent above last week’s average daily turnover of $459 million.

The increase in turnover came as the naira weakened mildly on Monday. The currency, however, regained part of the lost ground on Tuesday, returning closer to the N1,330-per-dollar level.

The naira traded within a relatively narrow range last week, between N1,329.16 and N1,331.33 per dollar, despite total NFEM turnover of about $1.83 billion during the four-day trading week.

Analysts at Cordros Research say they expect the naira to remain broadly stable around current levels in the near term, supported by resilient portfolio inflows, strong foreign reserves and a continued current account surplus.

“That said, downside risks remain from lower domestic naira yields and tighter global financial conditions. We believe that a narrower interest rate differential could reduce the relative attractiveness of naira assets and weaken portfolio inflows, increasing pressure on the exchange rate” the analysts noted.

Similarly, analysts at Cowry Assets Management say they expect the naira to remain relatively stable in the near term, supported by the improvement in external reserves and narrowing exchange-rate differentials.

However, the analysts say movements in crude oil prices and developments in the Persian Gulf could influence foreign exchange liquidity and sentiment.