Naira depreciated by 2.3 per cent to N759.20 (as of 12 October) at the Investors’ and Exporters’ (I&E) window, with total turnover at the window (as of 12 October 2023) increasing by 79.1 per cent WTD to $629.37 million, as trades were consummated within the N700 –N846/$ band.

Last Friday, naira depreciated by 0.75 per cent against the dollar in I&E, closing at a rate of N764.86/dollar.

In the Forwards market, the rate depreciated across the 1-month (-0.4 per cent to N789.34/dollar), 3-month (-0.4 per cent to N807.82/dollar) and 6-Month (-0.1 per cent to N837.95/dollar) contracts, while the one-year (+0.4 per cent to N899.7/$) contract appreciated.

Analysts at Cordros Capital said that given the CBN’s recent circular stating that importers of all the 43 items previously restricted in 2015 can now purchase FX in the Nigerian Foreign Exchange Market (NFEM), the official exchange rate will depreciate towards the parallel market while the parallel market rate appreciates towards the official market such that the two rates find a new middle ground in the near term based on current FX liquidity conditions.

According to them, importers will return to the parallel market to fulfill their FX obligations when the market realises that FX supply is still minimal at the official market.

The analysts stated that the development will lead to another round of FX pressures in the parallel market.

On the equities market, heavy transactions in the shares of some banks and pharmaceutical firms lifted the volume of shares traded on the Nigerian Exchange Limited (NGX), as a total turnover of 1.5 billion shares worth N24.4 billion was recorded in 29,683 deals by investors on the floor of the Exchange, in contrast to a total of 2.4 billion units, valued at N22.1 billion that was exchanged in 27,965 deals on October 6, 2023.

Besides, the exchange also announced the listing of January to September 2023 Federal Government of Nigeria (FGN) Bonds on its platform on October 10, 2023.

The financial services industry (measured by volume) led the activity chart with 929.6 million shares valued at N12.9 billion traded in 13,626 deals; thus contributing 63.3 per cent to the total equity turnover volume. The healthcare industry followed with 171.2 million units worth N334.7 million in 452 deals. The third place was the oil and gas industry, with a turnover of 90.2 million shares worth N5 billion in 2,769 deals.

Trading in the top three equities namely Access Holdings Plc, Neimeth International Pharmaceutical Plc and Fidelity Bank Plc (measured by volume) accounted for 502.8 million shares worth N4.4 billion in 3,117 deals, contributing 34.21 per cent to the total equity turnover volume.

Further, a total of 13,290 units of Exchange Traded Products (ETPs) valued at N3.5 million were traded in 108 deals compared to a total of 898,301 units valued at N25.9 million transacted in 107 deals during the preceding week.

Also, 52,703 units of bonds, valued at N54.7 million were traded in 32 deals within the same period, compared to a total of 46,199 units valued at N46 million transacted last week in 23 deals.

On the price movement chart, investors’ appetite in BUA Cement (+12.6 per cent) and Dangote Sugar Refinery (+7.4 per cent) buoyed transactions in the equities market last week, causing the All-Share Index and market capitalisation to appreciate by 1.1 per cent to close the week at 67,200.69 and N36.92 trillion respectively.

Similarly, all other indices finished higher except NGX CG, NGX Banking, NGX AFR Bank Value, NGX MERI Growth and NGX Sovereign Bond depreciated by 0.16 per cent, 0.78 per cent, 0.94 per cent, 0.32 per cent and 0.56 per cent respectively while the NGX Premium and NGX ASeM indices closed flat.

As a result, the month-to-date (MTD) and year-to-date (YTD) returns increased to +1.2 per cent and +31.1 per cent, respectively.

Reacting, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said uncertainty around the country’s macroeconomic space and lack of clear policy direction from the fiscal and monetary authorities is slowing market recovery.

According to him, there is increased optimism that with the lifting of restrictions on the 43 items, the government would do the needful, especially in tackling the problems associated with FX by clearing the entire backlog within the shortest period.

“All eyes are still on the September consumer price index and Q3 corporate earnings reports to help investors and traders ascertain the true position of the economy as policy somersaults, lack of appropriate policy direction from fiscal and monetary authorities, coupled with lack of proper preparation before policy pronouncement continue to drag market momentum and dampen confidence in the market.

He pointed out that government failure to address the issue of FX backlog before lifting the restrictions on the 43 items would increase FX pressure on the parallel market.