Naira Climbs as International Payments Ease as Imports Slow
The naira strengthened across both exchange channels on Monday, appreciating 0.62% to ₦1,357.77/$ at the Nigeria foreign exchange market (NFEM) window.
The spot rate climbed to ₦1,395/$ in the parallel market, reflecting improved currency sentiment across both the regulated official segment and the informal foreign exchange market.
Importation of petrol and other manufacturers’ materials has been declining since the U.S.-Iran war disrupted global trade. The local oil regulator has also reduced the number of oil import licenses, thereby reducing payments for oil imports into Nigeria.
Exporters inflows reduced, while foreign portfolio investors continue to drive FX inflows in the currency market, supported by dollar boost from non-bank corporates and other eligible individuals.
Last week, the Naira reversed the depreciation recorded the previous week, appreciating by 1.98% or N27.02 at the official window, closing at N1,366.23/US$1.
The official rate improved after the Central Bank of Nigeria (CBN) ramped up FX intervention, selling $700 million in two weeks to boost supply.
The currency began the week trading around N1,405.62/US$1, before gradually strengthening to its strongest level by Friday. In the parallel market, the currency mirrored this trend, appreciating by 1.06% to close at N1,415.00/US$1.
However, this widened the premium between the two markets to N48.77/US$1, from N36.74/US$1 in the previous week, as gains recorded at the official window outpaced those in the parallel market.
Amidst uncertainties in the global commodity market, Nigeria’s gross external reserves crossed the US$50 billion mark, increasing by US$83.55m (0.17%) to settle at US$50.03 billion. Oil Tops $105 as Middle East War Keeps Prices Elevated
