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NAFEX window declares $909.6m turnover in one week

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There is no doubt that the newly introduced Nigerian Autonomous Foreign Exchange (NAFEX) widow has reversed the zero level confidence of investors to highest level of confidence in the foreign exchange market, as it recorded a whopping turnover of $909.59 million in just one week, findings by Daily Times has revealed.
 
The NAFEX, otherwise known as Importer &Exporters FX window, opened the week under review with on a positive of $131.84 million turnover on Monday, but surprisingly dropped to $125 million on Tuesday, declaring traded volume of $256.84 million in just two days.
 
Our further checks, also, showed that the Nigerian local currency, had recorded 0.04 per cent gain at the autonomous forex window, after opening trading activities a week ago at 359.66 per dollar, and 359.9 on Tuesday, respectively, but closed at 360.36, 359.06 last Monday and Tuesday.
 
However, as at last Wednesday, the turnover at the NAFEX had increased to $359.59 million with addition of the mid week daily traded volume of $102.59, even though it was opened for trading at N359.71 to the dollar but closed at 360.22 per the Greenback.
 
The Importer &Exporters FX window on Thursday, added $186.37 million daily turnover to have a total figure of $545.96 million during the week, however, opened at a better rate of 359.63 against 359.71 on Wednesday and closed at 360.67 from 360.22 traded a day earlier.
 
But result at the autonomous forex widow on the last trading day of the week (Friday), recorded a daily turnover of $363.63 million, showing a significant increase in the total volume of the dollar traded on the NAFEX window, to put the figure to $909.59 million, representing highest turnover during the week under review.
 
 Although, the naira, at the Importer &Exporters FX window on Friday began daily activities at a better rate of 359.44 compared toThursday opening rate of 359.63 against359.71 on Wednesday and 359.9 on Tuesday but consequently closed high at 360.39 to the dollar against 360.67.
 
 Therefore, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, had told our correspondent that the newly introduced NAFEX rate fixing for foreign investors and exporters window will make naira sovereign and stronger in the market. According to him, Gwadabe, noted that the newly market derivatives will enhance a transparent, accountable and secured naira determination.
 
“The new policy would enable the Central Bank of Nigeria (CBN) to generate huge inflows running to billions of dollars to defend the local currency. The window will outwit and rattle all strata’s of operations of unofficial foreign exchange market.
 
“The window will see a roburst and stable planning foreing exchange demand decisions of businesses. It will also counter volumes of fx transactions in the so-called shallow parallel market. He, however, added that it will finally smoke out hoarders and speculators outside their holes. This is pretty the end of all frivolity in the forex market.
 
Although, after recording huge losses in naira and foreign currencies, currency speculators seem to have been chased out of the country’s foreign exchange (forex) market, The Nation has learnt.
 
The ABCON boss, said with rate convergence at both the bureau de change (BDC) and parallel markets, and transaction margins narrowed to N2 in most cases, the market seems unattractive to speculative dealers.
 
The speculators had lost over N700 million in March, as the CBN sustained its dollar interventions in the interbank market. The losses grew to over N1 billion in April, after the Investors’ & Exprters’ Forex Window was opened to deepen dollar liquidity in the economy.
 
Gwadabe said speculators lost billions of naira in the past, with their businesses badly hit when the CBN achieved exchange rate convergence.
 
According to him, forex demands in the market are genuine, and over 3,000 bureaux de change operators have continued to make their twice-weekly dollar bids at the CBN to boost liquidity. “We are happy that the forex demands in the market are becoming genuine. Speculators can no longer survive the current stability in the market and that is good for the economy and the naira,” he said.
 
Gwadabe defended the operations of BDCs, saying they have contributed significantly to the current exchange rate stability being witnessed in the country. Also, Afrinvest West Africa Limited Managing Director, Ike Chioke, said the jump in foreign inflows was not a surprise given the development in the FX market, particularly the launch of the I&E FX window in April.
 
“The largest volume of foreign inflows was recorded in May, underlining the positive impact of forex market transparency and flexibility on investor confidence. The knock-on effects of strong portfolio flows are already evident in performance of the domestic equities market which has historically been driven by foreign portfolio investors,” he said.
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