Naira Rallies Against USD, EUR, GBP – Gains 8% Year-to-Date
The Nigerian naira strengthened against the top Western currencies: the US dollar (USD), the Euro (EUR), and the British pound (GBP) at the foreign exchange market, amid robust liquidity and growing external reserves.
The sovereign unit was firmer in both dollar markets – the official and the informal segment, according to FX traders, including Central Bank data.
At the Nigerian foreign exchange market (NFEM), the spot FX rate closed at N1,327.78. 0.15% stronger than Monday, while the parallel market gained 0.36% to N1,380.00.
The exchange rate movements in the forex markets narrowed the gap between the two currencies’ trading segments to about N52, down from N55, according to Broadstreet investment firms.
Officially, it also gained against the pound, settling at N1,774.31 and the euro, which was quoted at N1,521.37. In the parallel market, the naira firmed against the euro to N1,565.00 but slipped against sterling to N1,865.00.
The exchange rate hovered between N1,325 and N1,332.5000 per dollar at the NFEM window during Tuesday’s trading session, reflecting a significant improvement in FX liquidity.
Financial institutions’ activities increased sharply, though turnover moved in the other direction, suggesting a bucket of low-ticket demand for international payments.
Interbank FX turnover fell 15% to $99.170 million, according to a Central Bank report, down from $116.413 million declared for the previous day. The lower US dollar volume was generated across 130 deals, which was above 102 deals count reported the previous day.
Nigeria’s gross external reserves inched higher to about $55 billion against $45.50 billion at the start of the year, continuing to support the currency.
The improved dollar flow has strengthened the local currency by 7.52% in the official FX market and 6.12% in the parallel market year-to-date, according to AIICO Capital Limited.
The firm expects the naira to hold near ₦1,330 at the official window. The rate cut narrows the return on naira assets, but reserves of about $55 billion, up a fifth since January, give the central bank room to smooth any outflows
Nigeria’s Foreign Reserves Rise to $54.41bn, Highest in 18-Year
