Nigerian Naira Softens as NFEM Interbank FX Turnover Plunges
The Nigerian naira softened against the US dollar at the official FX window, with data showing a sharp decline in interbank turnover over the past 24 hours.
Daily FX update from the Central Bank of Nigeria (CBN) showed that the local unit dropped to N1366.7140 per US dollar, from N1365.5303 quoted the previous day.
Forex market transactions were consummated between N1362 and N1368 per greenback at the NFEM window, a signal that liquidity shortfall extended to midweek.
For the past three consecutive trading sessions, the official exchange rate has been moving negatively against Western currencies, reflecting dislocation in geopolitical sentiment.
NFEM interbank FX turnover closed at $61.034 million, according to data obtained from the CBN, about a 41% day-on-day decline from $102.954 million the previous day.
CBN data revealed that the number of deals at the interbank FX window eased to 86 from 121 previously recorded. The naira is anticipated to trade within the range after about N11 gained per greenback last week.
With a slowdown in FX inflows from foreign portfolio investors, exporters and non-bank corporates, the CBN is anticipated to step up its market intervention to keep the local currency stable.
New hostilities in the Middle East have lifted oil prices for the first time in four sessions and are snapping the three-day decline in European and US bond yields.
The US dollar is mostly narrowly mixed against the G10 currencies. The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 per cent, in support of the Federal Reserve’s dual mandate.
The Committee is continuing its policy of maintaining ample reserves in the banking system. Most observers lean against a hike, but at the last meeting half of the “dots” implied a rate hike this year.
