Naira Depreciates as Interbank Deals Sink on FX Shortage
The naira maintained a downtrend against the US dollar for the second trading session at the Nigerian foreign exchange market (NFEM) on Tuesday. There are signs that the forex market’s liquidity shrank, as the number of interbank FX deals collapsed by 62% in 24 hours to 114.
According to data published by the Central Bank, the official spot rate closed at N1386.72 per dollar, up from N1383.58 the previous day, reflecting increased demand for foreign payments.
Naira wobbled at the official window last week despite the FX intervention operations that saw the Apex Bank inject $95 million into the supply side.
High demand for the dollar as a safe-haven asset strengthened the dollar index, while the Euro, British pound and other major trading partners weakened.
Last Friday, the CBN sold $65 million, bringing total intervention for the week to $95 million, as the apex bank continued to moderate demand pressures.
In the parallel market, the naira was relatively quiet, closing at N1,420 per dollar, reflecting tightening liquidity conditions. Based on data released by the CBN, the number of deals at the interbank fell to 44 from 115 at the beginning of the week.
NFEM interbank turnover declined to N30.953 million, reflecting an FX shortage in the official window, down from N145.291 million on Monday.
Elsewhere, Oil markets are closing March on a historic surge, with prices posting their biggest monthly gain ever after an unprecedented global supply shock.
The global benchmark Brent crude oil price has hit $119 (£90) per barrel, close to its highest since the start of the US-Israel war with Iran.
Responding to the US-Israel air strikes, which began on 28 February, Iran has effectively blocked the Strait of Hormuz, a key passage for ships carrying oil.
Wholesale oil prices have surged since, and car fuel prices have jumped to their highest in years. Countries are responding differently to rising oil prices, with Australia making bus travel free while Egypt asks shops, restaurants, and cafes to close early to cut energy use. Dangote Refinery Obtains $4bn Syndicated Loans Led by Afreximbank
