Naira Touches N1,369 as Demand for US Dollar Payments Surge
The Nigerian foreign exchange market (NFEM) closed with a US dollar shortage as the naira exchange rate touched N1369 (8-month low) during Thursday’s intraday trading session
The official spot FX rate closed at N1344.4049 per US dollar at the NFEM window, reflecting a wider gap between US dollar demand and supply in the local forex market on Thursday.
The local unit faced pressure from non-bank corporate demand for US dollars for a series of international payments, weakening the rate from N1334.7233 reported by the authority the preceding day.
Activity in the interbank foreign exchange market rose sharply, driven by a surge in international payment requests from banks’ customers.
Daily FX data released by the Central Bank of Nigeria (CBN) revealed that transactions were executed between N1336 and N1369 during the intraday trading session. The FX quotes signal building pressure at the official window after a sharp recent rally.
NFEM interbank FX turnover accelerated to $316.545 million, up more than 148% from $127.628 million reported on Wednesday, according to CBN data. The report revealed that interbank deals rose from 95 to 191.
Speaking to the significant depreciation of the exchange rate, FX analysts said Apex Bank may step into the ring with FX sales to support the local unit. The market expects the naira to weaken due to year-end and pre-election demand for US dollars.
However, some analysts think the naira position is different now, as the nation’s foreign reserves continue to climb, reaching $55.146 billion on Wednesday from $55.119 billion last week.
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