Bid/Ask spreads shrink as Naira sustains value in parallel market


Friday, October 14, 2016 3.20 pm / TheAnalyst 

Today Naira appreciated against Dollar in parallel FX market by 1.50% to close at N459.00, but depreciated in interbank FX Market by 1.07% to close at N307.77.

Also, end of the week analysis revealed Naira with similar pattern, to appreciate by 2.96% in parallel market but depreciated by 0.33% in interbank FX market as against flat position in parallel market and 1.56% appreciation at interbank market recorded in previous week.

Speculative tendency and scarcity of FX remain the driving factors depressing the value of Naira, while the currency is yet to find its support level as trading activities had indicated in both markets.

Post Flexible FX regime analysis revealed that Naira had lost 9.20% and 33.04% in value at both interbank and parallel markets respectively as at end of trading session today. The trading gap or spread between the interbank and parallel market sheds weight to close lower at 49.14% as against 54.20% recorded in previous week.

We would like to maintain our position as indicated by a cursory analysis, using CAGR of 0.46% to put the value of Naira above N800.00 against a Dollar before end of year if the factors that are driving current scarcity and speculation remain unchanged.

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