Nigerian Naira Falls as Forex Demand Surpasses Dollar Volume
The Nigerian naira declined against dominant Western currencies on Thursday amid record demand for US dollar payments at the official window, outpacing FX liquidity.
The local unit value declined by N1.03 to N1,364.88 per US dollar at the official forex market from ₦ 136.8491 per greenback quoted the previous day.
Intraday transactions were consummated between N1363 and N1366.5000 per US dollar at the Nigerian Foreign Exchange Market (NFEM), according to data released by the Central Bank.
Reflecting increased market-maker activity, the NFEM interbank FX turnover jumped to $98.804 million on Thursday, up by more than 31% from $75.357 million the previous day.
Similarly, the number of deals at the NFEM interbank increased to 106 from 82, confirming higher US dollar flows at the official FX market.
In the parallel market, the naira dropped to ₦1,420.00 to the US dollar due to an imbalance between foreign currency demand and supply.
Amidst a sharp slowdown in global oil prices, Nigeria saw its gross external reserves increase by $56.68 million to $52.00 billion.
By market consensus, the naira is anticipated to trade range-bound as the Apex Bank maintains its stance to keep the currency market liquid to enhance the pricing mechanism.
Oil prices rose on Thursday as investors weighed the uncertain outcome of negotiations between Iran and Oman over shipping through the Strait of Hormuz, while reported attacks on Saudi oil tankers by Yemen’s Houthi rebels heightened concerns over global energy supplies.
Brent crude futures climbed 83 cents, or 1.04%, to $80.28 per barrel by 1158 GMT, while US West Texas Intermediate (WTI) crude gained 61 cents, or 0.81%, to $75.83 per barrel.
Market participants remained cautious following reports that Iran and Oman had reached an understanding on the geographic coordinates for a shipping route through the Strait of Hormuz, with a joint announcement expected once finalised.
Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, said on Wednesday that the agreement would proceed provided there was no interference from third parties.
The proposed arrangement, according to a senior Iranian source and two regional officials, would grant Tehran greater control over vessels entering the Gulf through the Strait of Hormuz as part of efforts to ease tensions with the United States.
The strategic waterway handled about one-fifth of global daily oil and liquefied natural gas shipments before the latest conflict erupted in late February, making any disruption a major concern for energy markets. Prices of Crude Oil Hold Below $80 on US-Iran Peace Progress
