The naira recorded a mixed outing at the official and parallel markets at the close of last week.

The Nigerian currency saw a 0.01 per cent appreciation at the National Foreign Exchange Market, where it had closed the week at 1,533.57/$, compared to 1,533.74/$ from the previous week.

According to the Cowry weekly report, at the parallel market, the story was different as the naira declined 0.52 per cent week-on-week to close at an average of 1,545/$1.

This depreciation was blamed on a surge in forex demand, as businesses and individuals sought dollars amid illiquidity.

In a chat with The PUNCH, the National President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, said liquidity was the main challenge in the FX market as of now, a situation which was exacerbated by seasonal travelling.

“I think the bottom line is liquidity. Yes, we are witnessing a spike in the market. So, that volatility has been there. Many other factors could be responsible. One, I think it’s liquidity; two, it’s the travellers’ demands and other drivers that are putting pressure on the naira,” he said.

In the build-up to the holiday season, Nigerian banks had announced the resumption of the use of naira debit cards for international transactions. This is a reversal from December 2022, when banks notified their customers that naira-denominated debit cards would no longer be permitted for foreign transactions.

Gwadebe added that there appears to be a widening in the spread between the market, which has closed in recent times, effectively quelling speculation.

He said, “The spread between the official market and the open market appears to be widening.”

The experts at Cowry Asset Management Limited expect the naira to sustain its marginal gains in the coming week, supported by the Central Bank of Nigeria’s continued intervention in the foreign exchange market.

“While global trade tensions and volatility in the oil market, particularly the recent downward trend in crude prices, pose potential headwinds, the apex bank’s efforts to inject liquidity and stabilise demand pressures should provide a buffer against sharp depreciation. As such, although external factors may exert intermittent pressure, we anticipate the naira to hold relatively steady, especially at the official window, barring any major shocks in global commodity or financial markets,” the weekly report noted.

AIICO Capital added that the CBN’s announcement of clearing all outstanding FX forward contracts had also boosted the naira performance at NFEM.

It also holds that the FX market will be stable in the near term, supported by the CBN’s ongoing refinement of existing policies.

On Thursday, the CBN announced the completion of the forensic audit of FX forward contracts, which it said uncovered significant irregularities in the execution of some of the foreign exchange forward contracts.

Some of the irregularities include the company name on the approved sales result being different from the company name on the Form M portal and the cumulative value of the approved FX Forward Sales on this Forex Form Number from Auction 1 in 2021 to the date of this auction exceeding the total value of the forex form number, sales higher than demand, non-permissible items of import, unauthorised companies importing milk, vague narration of the item of import, and sales without demand.

Others are incorrect forex form numbers, forex forms not indicated, blank Form M, rejected Form A applications on the Form A portal with approved sales, approved sales values higher than the cost of the import item on the Form A portal, and the approved sales value higher than the cost of the imported item on the Form M portal.

The CBN document indicated that all valid FX contract claims had been paid and that the apex bank was considering legal action against violators. With the forensic audit, CBN said that the case of undelivered forward contracts is now concluded and closed.