The exchange rate between the naira and the US dollar appreciated on Wednesday, 11th January 2023, to trade at an average of N740/$1 on the black market, following the first week of 2023 on an unstable trend.
This is according to information provided by parallel market dealers to RateCaptain, the naira increased by 0.68% in comparison to the N745/$1 recorded on January 1, 2023. They also warned that the dollar’s gain is risky owing to market volatility.
As the foreign exchange market resumes full operations in the first trading week of 2023, the naira has suffered its first loss. The naira depreciated from N440 per dollar on January 3rd, 2023 to N462 per dollar at the end of the trading period on January 10th, 2023. According to data from the FMDQ Securities Exchange, the naira depreciated by 4.8 per cent from the beginning of the 3rd of January 2023 to the 10th of January 2023.
The naira’s depreciation occurred because of a low level of market activity as measured by daily foreign exchange market turnover, a scarcity of dollars in the inflow due to diminishing foreign reserves, and a rapid rise in demand for foreign currency, particularly by students paying international school fees at the beginning of the year. Reacting to Naira to the dollar exchange rate, Rate captain economist analyst has said the exchange rate of the naira to the dollar may go above $1 to N900 if some “dramatic” measures are not taken by the federal government fiscal and monetary policies.
According to data from Nigeria’s central bank (CBN), the first trading week of 2002–03 recorded an upward trend in the foreign reserve. The gross foreign reserve as of the first trading day of 2022, which was the 3rd of January 2023, amounted to $37.06 billion and increased to $37.20 billion on the 9th of January 2023. The CBN recorded a $125.37 million increase in the first trading week of 2023. A variety of variables has influenced the evolution of Nigeria’s foreign exchange market, including shifting patterns of international commerce, economic institutional changes, and structural adjustments in production.
Previous CBN data revealed an increasing annual trend in its foreign reserves, which stood at $36.40 billion at the end of December 2021 and increased to $37.08 billion at the end of December 2022. This shows an annual increase of $687.40 million from December 2021 to December 2022. According to Rate Captain Analyst, focusing more on agriculture and exporting more agricultural products will continue to boost Nigeria’s external reserves while also creating a welcoming environment for foreign investors.
CAPITAL MARKET UPDATE
The Nigerian stock market closed the trading session with the NGX All-Share Index (ASI) increasing by 0.47 percent from 51,693.08 on January 9th to 51,446.60 on January 10th, 2023. As of the close of the market on Tuesday, the stock market value stood at N28 trillion. Since the start of the year, the stock market has advanced by 149.06 basis points, or 0.28, with the trading volume amounting to N345.4 million and a total market cap of N28.021 trillion.
The Nigerian stock exchange recorded a loss of N134 billion incurred by investors as THOMASWY led 17 top gainers with an increase of 9.43 percent to close at N1.16, followed by MBENEFIT with an increase of 7.14 percent to close at N0.30. NEM topped the 16 top losers with a decrease of 10.00 percent to close at N4.05, followed by CHELLARAM with a decrease of 9.90 percent to close at N1.82.
Leave a Reply