Naira Steadies Against U.S Dollar Across FX Markets

Naira Steadies Against U.S Dollar Across FX Markets

• Against United States (U.S) dominance, the naira traded steadied across foreign exchange (forex) markets amidst analysts’ expectations of a local currency devaluation.
• For most transactions consummated in foreign currencies in Nigeria, US dollar dominance continues to push demand for the greenback upward sustainably across markets.
• Data from the FMDQ Exchange platform revealed that the demand level for the greenback eased marginally at the various segments. Foreign currency traders kept bids between N463 and N470.
• Bradstreet analysts’ consensus indicates that local currency will be devalued to an average of N500 per US dollar in 2023. In his inaugural speech, President Bola Tinubu hints about possible fx reforms to end the country’s multi-tiered exchange rate.  
• Africa’s largest economy faces a scarcity of foreign currency following a decline in foreign investment inflows into the local economy. Forex backlog has also been growing while the apex bank continues to return bids received at secondary market intervention auction sales.
• In Nigeria, the exchange rate has been under pressure as the Central Bank of Nigeria (CBN) widened its spread after it sold the U.S. dollar at N645 last week.
• After the apex bank debunk stories of the local currency devaluation, the naira moved against the US dollar and steadied at the investors, and exporters’ FX window as moderate volumes were transacted by market participants.
• The Naira closed flat at N464.67 against the US dollar. Conversely, the parallel market experienced an appreciation, with a rise of 0.25% to N750 from N752 amidst a slowdown in speculative buying.
• One-month, three-month, and one-year naira-dollar forward rates closed at N477.19, N504.86, and 558.17, respectively, indicating N5.29, N6.44, and N7.62 gains, according to Cowry Asset Management analysts.
• Analysts noted a bleak outlook for foreign receipts from crude oil sales. Bonny and Brent declined to $72/barrel level at the week start, before finally finding momentum at the close of the week to settle at $74/barrel level.
• Elsewhere, the Organisation of Petroleum Exporting Countries and Allies (OPEC+) cut Nigeria’s quota by 20%, signal addition downsides to fiscal performance. #Naira Steadies Against U.S Dollar Across FX Markets
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