" /> Resurgent naira boosts investor confidence | Hallmarknews
Published On: Mon, Jul 17th, 2017

Resurgent naira boosts investor confidence


Renewed investor confidence in the Nigerian foreign exchange market and the Central Bank of Nigeria’s (CBN) continued interventions have eased pressure on the naira as the country’s currency appreciated by 3.43 percent on the Nigerian Autonomous Foreign Exchange Market (NAFEX) to N362.80 on Friday from N375.70 when the window was launched on April 21, 2017.

Over $3.83 billion has been exchanged at the NAFEX over the last three months, while CBN intervention in the forex market has injected over $7.8 billion since aggressive intermediation in February 2017. Before CBN intervention the naira had slumped to N525 to a dollar in the parallel market. But Pound and Euro held up at N472 and N420 respectively at alternate FX market on Friday.

Traders note that there has been a steady convergence between the different segments of the market over the last three months, especially between the NAFEX and the parallel market. The currency was stable at the parallel market appreciating by N1 to $/N367 compared with $/N368 it exchanged for between Tuesday and Thursday last week.  The British Pound and Euro also traded at £/N397.67 and €/N350.35 respectively as the naira dipped 0.44 percent and 0.32 percent against both currencies respectively at the close of business on Friday.

“Confidence is gradually returning to the foreign exchange market,” says Dr Vincent Nwani, Director, Research and Advocacy, Lagos Chamber of Commerce and Industry (LCCI). According to him, “the stock exchange year-to-date return is about 23 percent. Last year it was about -6 percent, which shows that foreign investors who had long left the market are straggling back.”

He asserts that with the market becoming more liquid, investors who had money outside the country are beginning to bring them back. “Liquidity of foreign currency has returned, though there are concerns that if oil prices go down again or the Niger-Delta militants strike, the forex problem may return,” said Nwani.

The intervention of the CBN in the forex market has helped ease pressure on the naira and the creation of NAFEX has also assisted in improving investor confidence in the system, said Moses Ojo, analyst at Panafrican Capital Plc.

“It seems investors are comfortable with the new window and we have seen a lot of participation in the I&E window,” he observes. According to him, “from an average weekly transaction of between $3 million and $40 million, these days we see transactions up to $400 million in that segment of the market.”

Analysts believe the naira may continue to strengthen against other currencies if crude oil prices continue to appreciate and the apex bank sustains the injection of forex into the market. Crude oil export which accounts for over 90 percent of Nigeria’s foreign exchange needs has been stable since the turn of 2017. Brent price was up 1.1 percent to $48.96 per barrel on Friday, while Light crude also appreciated 1.2 percent to $46.64.

Mr Andrew Esene, Research analyst, Futureview explained that there are now more suppliers of forex than buyers in the NAFEX window, which has helped reduce the pressure on the naira.

The influx of liquidity in the country’s foreign exchange market enables the apex bank to clear the backlog of unmet demands and manufacturers could just walk into their banks and put in Letters of Credits (LCs) and have funded without hassles.

The introduction of the NAFEX Window has boosted foreign investors’ confidence that they could easily exit any time they want to, Victor Ukapai, analyst with Focus Bank based in Lagos noted. He added that the platform allows sellers of forex to match up with buyers without any intermediary.

Over $380 billion foreign inflow has come into Nigeria since January, which was a result of the decision of the apex bank to allow market forces determine the value to the naira.

“The Purchasing Manager Index (PMI) also whichrose to 52.9 in June of 2017 from 52.5 in May, shows there is more forex liquidity in the country,” he enunciated.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • PDP in fresh crisis over chairmanship zoning, threatens 2019

    By Obinna Ezugwu The December 9 Convention of the People’s Democratic Party (PDP) will be the most critical in its history; it is a convention that would, to a large extent, determine its fate and course for action ahead of the much awaited February 2019 general election and may also determine its chances of returning […]

  • Why South East should ignore President Buhari

    By UCHE CHRIS   President Buhari’s last week visit to the south east on APC campaign for Anambra governorship poll and his promise to give more appointments to the region is a clear and abundant proof that he is either a bad politician or he takes the Igbo for a fool. It is sad and […]

  • GTBank doubles stock value as investors go bullish

    By OKEY ONYENWEAKU GT Bank’s share price has doubled in the last one year, leading investors to grin satisfactorily as there gambit on the stock seems to have panned out. The stock’s price has risen from N24.00 in January 2017 to N43.00 as at November 17, 2017, creating a capital gains opportunity of 79.2 per […]

  • Moody’s rating exposes poor state of banks

      .           Experts predict more recapitalization next year FELIX OLOYEDE Deposit Money Banks (DMBs) in the country have been caught in the web of liquidity squeeze, capital adequacy challenge and the encumbrance of raising fresh funds  as Moody’s Investors Service (Moody’s) downgraded their long-term local currency deposit and issuer ratings. The credit rating agency lowered […]

  • Brain drain: Doctors, nurses’ exodus cripples Nigeria’s health sector

    By AYOOLA OLAOLUWA The mass emigration of health care professionals, especially doctors, pharmacists and nurses, is on the verge of crippling the nation’s health sector, Business Hallmark findings have revealed. Though, the mass exodus of these skilled health workers abroad for greener pasture has been on unabated over the years, it has now reached an […]

  • S&P rates UBA highly, affirms ‘B/B’ credit ratings

    FELIX OLOYEDE S&P Global Ratings has given United Bank for Africa (UBA) a B/B rating based on the rating agency’s interpretation of UBA’s competitive strength in the Nigerian banking market. The agency’s latest report released on Friday showed that the bank has benefited from a strong brand franchise in the corporate and retail segments of […]

  •  Nigeria: The disquieting nuisance of elitism

    By TESLIM SHITA-BEY   At the heart of Nigeria’s social and economic dysfunction is not just the usual suspects of tribe and religion but also, and quite disturbingly, the self-preening and self-adulation of Nigeria’s elite. The failure of the educated leaders of the country to bring about a collective sense of nationhood and build a […]

  • (Across the counter) University of Ibadan banking services waiting for relief

    Banks within university environment usually have a large turnout of customers. It wasn’t any different when our across the counter team visited some banks within the University of Ibadan environment to review the quality of service being rendered. Our criteria included bank professionalism, customer care efficiency, security consciousness, corporate environment and ATM efficiency. Here is […]

  • Time is ripe for rates cut, says Rewane as inflation slows further in Oct.

    FELIX OLOYEDE This is the appropriate time for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to cut benchmark monetary rates after inflation rate slows down for the ninth consecutive time in October, said Mr Bismarck Rewane, Managing Director, Financial Derivatives. The National Bureau of Statistics on Tuesday released Consumer Price […]

  • ELAN National Lease Conference Focuses on Revamping Nigerian Economy

    FELIX OLOYEDE In furtherance of its objective of promoting the business of leasing in Nigeria, Equipment Leasing Association of Nigeria (ELAN) has concluded plans to organise the 15th Annual National Lease Conference with focus on revamping the Nigerian economy. The conference which is the biggest gathering of stakeholders in the leasing industry is expected to […]

  • Nigeria-centric restaurant, Labule, opens new outlet in Lagos

    Labule, Nigeria-centric restaurant, operated by an indigenous company, Roots Foods Limited, offering real Nigerian local delicacies in a unique environment that combines the setting of a modern quick service restaurant with that of an African setting of a local ‘buka’, has opened a new outlet on Admiralty Road in Lekki Phase 1, Lagos. The brand […]

  • Nigerian banks shine in Ghana

    By JOHNMARK UKOKO Nigerian banks have been credited with “revolutionizing “the banking sector in Ghana, due to the many innovations they brought to Ghana’s banking sector. The Ghana Deputy Minister of Trade and Investment Hon. Carlos Kingsley Ahenkorah said in Lagos that the innovation and transformation of the Ghana’s banking sector is credited to the […]

  • Ajimobi moves to save Oyo APC from disintegration

    By OLUSESAN LAOYE The seeming crisis in Oyo APC has now forced the Governor of the state, Abiola Ajimobi, to begin consultations with stakeholders to convinced members on why they must come together as a body to face the 2019 general elections, Although the internal crisis is yet to break open as the aggrieved party […]

  • YolaDisCo sale stalled as no potential buyers emerge

    By ADEBAYO OBAJEMU Two years after the core investors of the Yola Electricity Distribution Company, YolaDisCo, declared a force majeure owing to their inability to operate under the reign of terror unleased by Boko Haram, the Federal Government is yet to find any investor interested in operating the utility company, it has been learnt. In […]

  • Company Analysis: Much Ado about Seplat

      By TESLIM SHITA-BEY The oil and gas sector has had a bumpy since the beginning of 2017 with local oil major, Seplat, seeing its financials whipped raw by prior year liabilities despite rising revenues over the nine months (9M). The company in the last two years has moved from being distinctively bad to singularly […]

  • How to start a photography business

    By ZUBAIR DANIE While photography could be accounted for as a full blown course in any offering institution of learning for professionalism, the field equally provides a platform for individuals whose passion it is to project images as a form of livelihood. The socio-cultural aspect of Nigerians that play host of events like: wedding, naming, […]

Visit us on Google+