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•Gain excites NGX investors as ASI hits 70,000 mark
By Chinwendu Obienyi
Amid plans by the Federal Government to digitise FX transactions, Daily Sun investigations have revealed that Nigeria’s local currency, again bounced at the parallel market, settling at N1,170/$1 at the close of transactions on Wednesday.
This was even as the rally has excited investors who in turn, increased their buying tempo at the nation’s bourse, resulting in its index hitting the 70,000 mark for the first time in history.
The Naira had begun the week, taking a 3 per cent haircut to close Monday at N1,150/$1.
But its improving fortune was reversed when it depreciated to N1,185/$1 on Tuesday and N1,142/$1 at the parallel market.
On the other hand, having appreciated by 21.9 per cent to N815.32/$1 from N993.82/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data obtained from FMDQ’s website revealed that the naira appreciated by 3.7 per cent to N786.02/$1 at NAFEM.
According to Bureau De Change (BDC) operators who confided in Daily Sun yesterday, news of the price at NAFEM is causing the descent at the parallel market hence demand for dollars seems to be decreasing each day. This growing concern among the operators comes at the back of news that the U.S Fed is preparing to announce its interest rate decision soon which may have a positive or negative impact on how the dollar fares in the global markets.
Since the naira devaluation, the Central Bank of Nigeria (CBN) has taken unorthodox measures to support the local currency in the foreign exchange market and with on-going discussions to digitise FX transactions to discourage speculative demand and cash hoarding, there are feelers that currency traders will try to re-evaluate their trading strategy to compete in the market.
This development has not gone unnoticed by investors at Nigeria’s stock market.
Despite gaining N1.71 trillion in October, investors kicked off the month of November in style, as the All-Share Index (ASI) which closed last trading month of October at 69,236.19 points, closed yesterday’s proceedings at 70,581.76 points, representing 1.94 per cent increase.
Furthermore, investors gained N739 billion from an opening value of N38.038 trillion to N38.777 trillion. The market has been on an upward trajectory since the entry of the new administration led by President Bola Tinubu, due to proactiveness in implementing necessary reforms such as the removal of fuel subsidy and the liberalization of the foreign exchange market.
Data from NGX shows that while foreign investor participation in the capital market is slowly rising, domestic investor sentiment has been highly positive, with increased allocation into equities.
Already, total transactions in the equity market hit N2.71 trillion as of September end, 38 per cent higher than the corresponding period in 2022.
Sources of FX liquidity remain largely elusive. Nigeria’s largest source of dollar revenue is from oil sales, but Nigeria produces less than OPEC’s daily quota of 1.8 million barrels per day, which is decreasing month by month despite rising oil prices.
Additionally, recent geopolitical developments, including conflict in the Middle East and the ongoing conflict between Russia and Ukraine in Eastern Europe, have increased demand for the dollar. Market speculators believe demand for the US dollar will skyrocket as investors seek refuge in safe-haven currencies during this period of increased uncertainty.
Meanwhile, abokiFX is yet to publish daily exchange rates for about a week now. A look at its platform revealed that although there are updates on the dates, no update has been provided on the exchange rates so far, leading to concerned traders on “X” (formerly twitter) to question its disappearance for such a period.
When Daily Sun checked its official page, it noticed that it has been active and has been reposting several news articles regarding the exchange rates.
