Naira Tumbles Against U.S. Dollar as FX Demand Shifts
The Nigerian naira tumbled against the US dollar at the official foreign exchange market on Wednesday as a shift in demand halted the local currency rally.
Data released by the Central Bank of Nigeria (CBN) showed that the spot FX rate depreciated to N1329.2129 per dollar on Wednesday, from N1320.2469 the previous day.
The spot rates hovered between N1321.5000 and N1334 per dollar during the trading session at the Nigerian Foreign Exchange Market (NFEM) on Wednesday.
Separate FX traders at Broadstreet told MarketForces Africa that the market experienced a US dollar shortfall on the supply side.
The local currency has moved strongly against the dominant US dollar over the past week as heightened FX inflows into the economy reduced demand pressures.
Financial institutional activities at the NFEM window surged, with interbank FX turnover and deal counts both rising significantly from the previous close.
Interbank FX turnover rose sharply on the day to $94.425 million, up by about 70% from $55.604 million on Tuesday. The number of interbank FX trades rose to 86 from 58.
Nigeria’s gross external reserves edged higher to $54.283 billion, up from $54.208 billion, reflecting sustained additions from across the sources,
Some analysts said Nigeria’s external reserves could reach $55 billion in a couple of weeks if the current momentum continues, supported by elevated oil prices in the global commodity market.
The price of oil surpassed $100 a barrel for the first time since July after attacks on oil facilities and ships in the Middle East threatened to debilitate an already weakened supply chain.
Brent crude, the international standard, jumped nearly 3% to $100.72 early Wednesday. U.S. benchmark crude gained 2.4% to $95.25 a barrel, and U.S. gasoline prices rose sharply overnight.
The average price for a gallon of regular gasoline ticked up 7 cents overnight to hit $4.22, now more than a dollar above what it cost at this point last year. Naira Loses Against US Dollar, FX Reserves Cross $33bn
