Naira Rebounds as Improved FX Supply Eases Demand Pressure
The naira rebounded at the official window on Thursday as higher US dollar supply reduced the negative effects of rising seasonal demand for international payments.
According to the Central Bank of Nigeria (CBN) updated FX data, the exchange rate appreciated to N1.355.8815 amid a significant spike in interbank activity among financial institutions.
The local currency rose from N1,358.3885 per dollar the previous day, driven by surging demand for international payments linked to year-end imports and corporate FX liability settlements.
FX transactions were executed at the Nigerian foreign exchange market between N1348 and N1363.7500 per dollar during the day, according to a CBN update.
Today, interbank FX turnover rose sharply by more than 593% to $644.845 million from $93.010 million the previous day, as market makers’ bids and asks widened.
FX market analysts attribute the surge to possible high-ticket transactions executed in the local currency markets on behalf of non-bank corporates.
Also, the number of deals at the interbank window rose to 242 on Thursday from 99 the previous day, according to CBN data.
The local currency has been under immense pressure due to rising FX outflows. The spot FX rate peaked at N1365 per dollar again this week, with analysts expecting the CBN to intervene.
Nigeria’s external reserves continued to decline, with the latest data showing a gross balance of $64.903 billion. External payment pressures continue to reduce the nation’s external buffer amid moderating global oil prices.
Meanwhile, U.S. oil prices rose Thursday as President Donald Trump’s comments stoked fears that an end to the U.S.-Iran war remained out of sight.
Brent crude traded 1.9% higher at $94.48 per barrel. West Texas Intermediate futures were up 2% at $88.19 per barrel. “We don’t need a deal with Iran. Those days have long since passed. We’ve got their money, Hundreds of Billions of Dollars, and we’ve got their Strait!”
