FX Spread Widens as Naira Exchange Rates Diverge
FX spread, or the gap between the informal and official currency exchange rates, widened to 1.70% on Tuesday as the naira moved in different directions.
Market report revealed that the naira appreciated by ₦3.04 to ₦1,445.39/$ in the official market as the supply side remained strong against that pressure from the US dollar.
On the other hand, the exchange rate weakened by ₦5.00 to close at ₦1,470.00/$ in the parallel market. As a result, the market spread widened to 1.70%, from 1.14%, though FX market confidence has significantly reduced speculative activities.
Exchange rate data from the Central Bank showed that there was a marginal appreciation of the Naira at the Nigerian Foreign Exchange Market (NFEM), supported by an improved liquidity and demand management.
The NFEM Rate rose by ₦3.04/$ to close at ₦1,445.3929/$, effectively reversing some of the marginal losses recorded at the previous session.
This reflects a momentary easing of pressure on the foreign exchange window. Meanwhile, the External Reserve position increased to $44.67 billion, up by about 9.3% from the beginning of the year to date.
Analysts said they expect the naira to trade in line with prevailing demand and supply levels, as external reserves provide support.
Elsewhere, oil prices eased on Tuesday as markets weighed faltering Russia-Ukraine peace hopes against fears of oversupply. Brent crude shed 76 cents, or 1.20%, to $62.41 per barrel, while U.S. West Texas Intermediate (WTI) slipped by 71 cents, or 1.20%, to $58.61.
Gold prices fell as investors took profits following a six-week high in the previous session, while they awaited key U.S. economic data ahead of the Federal Reserve’s policy meeting next week.
Spot gold receded by 0.85% to $4,196.96/oz, while U.S. gold futures lost 1.07% to $4,229.00/oz.
Analysts expect markets to take a cautious but watchful tone, with gold under some pressure from firmer U.S. yields and awaiting key data, while oil could stay supported by lingering geopolitical supply risks. Dangote Cement Gains 10% in Fresh Rally
