Naira Exchange Rate Rises at NFEM as FX Demand Declines
The naira exchange rate improved to N1378 per US dollar at the Nigeria Foreign Exchange Market (NFEM) window for international payments executed on Thursday.
The spot FX rate rose to N1,378.4313 per dollar, according to official data released, reflecting the absence of significant pressures in the currency market, from N1,379.0675 quoted the previous day.
The local unit’s gain was driven by a sharp slowdown in FX intermarket activity among financial institutions, which led to bids for customers at the official window.
Interbank FX turnover reduced sharply to $78.708 million, according to the Central Bank, down by more than 62% in 24 hours from $208.094 million posted at the official market on Wednesday.
FX traders also noticed a sharp decline in the number of deals at the NFEM window in the absence of the Central Bank dollar injection. Deal counts shrank to 106 during the NFEM window, down from 150, reflecting a slowdown in FX activity among market makers.
Markets saw a sharp decrease in transaction volume, meaning that heavy dollar demand has ebbed, allowing the local currency to recover and establish a more favourable exchange rate.
In the parallel market, the naira depreciated to N1400 per US dollar as demand in the informal segment accelerated, overshadowing US dollar supply volume.
The U.S. dollar held firm against most major currencies on Thursday as renewed Gulf tensions revived safe-haven bids while surging oil prices boosted rate hike bets, keeping the Japanese yen under pressure.
The dollar fetched 162.41 yen, hovering near the strongest level since July 1. The euro and the British pound were largely flat, trading at $1.1426 and $1.3392, respectively.
The New Zealand dollar remained well bid after the previous day’s rate hike and the central bank’s hawkish stance, extending its gains by 0.5 per cent to $0.5725.
Gold recovered from a brief drop below $4022 but stalled a little below $4090. It is trading with a firmer bias and reached almost $4118 on Thursday.
The five- and 20-day moving averages are converging in the $4125-35 area. Silver rose to nearly $57.20 yesterday, then rebounded to around $59. It also enjoys a firmer tone but has held below $60.
Global Markets Tainted by Tensions, Wall Street, European Stocks Ease
