Friday, September 30, 2016 3.20 pm / TheAnalyst
On September 30, 2016, the Naira gained against the dollar in the parallel FX market by 3.86% to close at N473.00, but slipped further at the interbank FX Market by 2.07% to close at N311.62. In the current week, Naira depreciated in value by 1.05% and 6.29% against 0.18% and 4.25% in both interbank FX and parallel markets, respectively.
Speculation and scarcity of FX in the market remain major reasons depressing the value of Naira to a new low of N492 against a Dollar in the week as post floating analysis had reflected.
Post Flexible FX regime analysis reveals that the Naira has lost 10.56% in value at the interbank FX Market, while the trading gap or spread between the interbank and parallel market has widened further by 51.79%, as the Dollar appreciated significantly against the Naira by 37.10% in the Parallel market with CAGR of 0.46% in the last 70days
A cursory analysis using CAGR 0.46% puts the value of Naira above N800.00 against a Dollar before end of year if the factors that drive current scarcity and speculation remain unchanged.
1. Scarcity Hits Parallel Market Due to High FX Demand