Naira Gains as Nigeria Records 19th FX Inflows in Days
The naira climbed further as forex market liquidity stayed ahead of US dollar demand logged by eligible FX users in Nigerian autonomous foreign exchange market. A similar mild bullish trend was spotted in the informal currency market as the Central Bank of Nigeria rose to the occasion to reverse the negative pattern witnessed in the past three weeks.
May 2024 has not been a nice month for the naira across the forex markets compared with the sustained gain reported in the previous month. The apex bank sold FX to local banks last week, a fresh move to support the naira, which shed 43% in 31 days, according to a MarketForces Africa report.
Currency traders expect subsidised US dollar sales to Bureaux de Change operators (BDCs) to lessen the negative effects of US dollar demand pressures on the naira. According to data from the FMDQ Securities Exchange, the naira demonstrated strength against the US dollar, gaining by 0.23% to close at N1,465.68 per US dollar in the official market.
Also, the exchange rate appreciated by 0.48% in the parallel market, closing at an average of N1466 per greenback.
Nigeria’s gross external reserves climbed to $32.663 billion over sustained FX inflows from remittance, ahead of more than $2 billion in inflows from an external lender in June. The nation’s foreign reserves started receiving inflows after it hit a low of $32.106 billion around April 19. 2024.
Brent crude traded slightly above $83 per barrel amidst uncertainties in the global commodity market. The West Texas Intermediate (WTI) crude futures fell below $79 per barrel on Tuesday after a 0.4% loss the previous day. The slide was due to concerns over continued high interest rates by the US Federal Reserve, which has led to a pessimistic outlook on global growth and energy demand.
At the Monetary policy committee meeting, members highlighted the naira’s volatility, attributing it to seasonal demand, a characteristic of a market-driven FX market. Furthermore, the Committee noted the marginal increase in FX reserves while urging the CBN to sustain its focus on increasing its FX reserves.
The Committee praised the recent decision by the CBN to grant licenses to fourteen International Money Transfer Operators (IMTOs), anticipating that this move would enhance competition within the sector and facilitate remittances through official channels. #Naira Gains as Nigeria Records 19th FX Inflows in Days Nigerian Exchange Grows as Equities Investors Gain N61bn
