close
close

Naira drops to N1,402.67 in latest official market trading

In the opening trading session of May at the NAFEM window, the Naira experienced a slight decline, settling at N1,402.67 to the dollar, which is a 0.83% decrease from the previous close of N1,390.96 in April.

Market data from FMDQ revealed a fluctuation within the day, with the Naira hitting a peak of N1,445 and a low of N1,299.42 against the dollar, culminating in a significant spread of N145.58.

Meanwhile, the volume of dollar transactions saw a modest rise of 3.32%, reaching $232.84, up from $225.36 on the preceding Tuesday.

In the parallel market, the Naira weakened further, dropping to N1,380 per dollar on May 2nd, marking a 1.45% fall from the N1,360 rate on April 30th.

This shift brought the disparity between the parallel market and NAFEM rates down to a mere N22.67 from the N40.96 observed on Tuesday.

News continues after this ad






News continues after this ad




On a positive note, the Stanbic IBTC Nigeria PMI reported a slight uptick to 51.1 in April, up from 51.0 in March, attributed to the Naira’s fortification which eased inflationary pressures and boosted business activity in Nigeria to a three-month high in April 2024.

Recommended reading: Naira opens May with slight decline, trades at N1,360/$ in parallel market

More Insights

  • The Nigerian Naira experienced volatility within the Investors’ and Exporters’ (I&E) window, hitting a high of N1,445 and a low of N1,299.42.
  • The Naira saw a depreciation of 2.86% against the British pound, concluding the day at an exchange rate of N1,750, a drop from the previous day’s N1,700.
  • Against the euro, the Naira weakened by 3.33%, with the exchange rate settling at N1,500, a decrease from N1,450 in the prior session.
  • Forex market activities experienced a marginal uptick, with the transaction volume rising by 3.32% to reach $232.84 million, exceeding the previous amount of $225.36 million as noted by the Nigerian Autonomous Foreign Exchange Market (NAFEM).
  • The Central Bank of Nigeria (CBN) reported a slight growth in reserves by 0.318%, with the total reserves increasing to $32.255 billion on April 30th from $32.233 billion on April 29th, continuing an upward trajectory for six consecutive days.

FX gains ease inflation pressure

  • The Stanbic IBTC Nigeria Purchasing Managers Index (PMI) has highlighted that the appreciation of the naira in April has been a significant factor in decelerating the growth of purchase prices and output charges. This trend has contributed to a moderation in inflationary pressures. The PMI report further emphasizes the ongoing impact of exchange rate fluctuations on business conditions, pointing out that the strengthened naira has led to the most gradual increase in prices witnessed in approximately twelve months.
  • It stated, “April saw a decrease in inflationary pressures within Nigeria’s private sector, a welcome change after March’s unprecedented surge in both purchasing costs and selling prices. The main Purchasing Managers’ Index (PMI) experienced a marginal rise to 51.1 in April, up from 51.0 in March. This increase marks the fifth successive month of improvement in the sector’s business conditions, although the overall progress remains modest.”
  • “Business conditions remained significantly affected by fluctuations in the naira, which in turn influenced pricing structures. Notably, the most recent increase in selling prices was the mildest observed in nearly a year, indicating a deceleration in the rate of price growth. “This trend of subdued price escalation was consistent across all four major sectors analyzed in the survey.”
Recommended reading: Naira trades at lowest level amid falling US dollar index