Naira Dips Near N1,348 on FX Demand, Supply Imbalance
The naira dipped near N1,348 against the US dollar due to an imbalance in foreign currency supply and demand for international payments. The Nigerian Foreign Exchange Market (NFEM) saw a slowdown in financial institutions’ activity, with FX turnover and deal counts declining.
Data released by the Central Bank of Nigeria (CBN) revealed that the spot exchange rate weakened to N1345.7983 per US dollar for foreign payments from N1346.93.48 the previous day.
International payment transactions were consummated between N1346 and N1349.5000 per greenback, a tail-end shift in the absence of CBN FX injection.
Despite increased demand for FX to meet import-related payments and corporate obligations, as well as profit-taking by foreign portfolio investors, the naira recovered last week as CBN flooded the market with about $1 billion.
At the interbank forex window, FX turnover dropped to $100.929 million on Wednesday, down by 15.1550% from $118.957 million recorded the previous day. The number of deals at the interbank FX window moderated to 97 from 117 on Tuesday.
Nigeria’s foreign reserves continued its downtrend for the fifth consecutive day, with the gross balance at $55.149 billion, down from a peak of $55.264 billion. The market expects additional inflows to halt the decline as oil prices remain elevated in global markets.
The US Dollar (USD) underperforms its major currency peers on Wednesday due to the victory of United States (US) Democrats in both houses of the federal legislature.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.43% lower to near 101.40. The DXY is near its monthly low of 101.25, posted earlier in the day. #Naira Dips Near N1,348 on FX Demand, Supply Imbalance# Naira Gains Traction on Improved FX Liquidity, Closing at N1,346/$
