Naira Exchange Rates Diverge on Tight FX Liquidity
The naira exchange rates diverged due to imbalance in the volume of foreign currency demanded and supplied in the forex markets. On one side, the naira recorded gain against the US dollar. At the other end, exchange rate worsened as currency traders prorated US dollars among competing FX requisition in the informal market.
The market still await FX sales from the Central Bank of Nigeria (CBN) to saturate the supply side. Last week, the apex bank sold US dollar to local deposit money banks. However, currency traders in the informal market are in short supply despite rising demand for foreign currency by invisible FX users.
According to data from FMDQ Securities Exchange, the naira maintained uptrend against the US dollar, appreciating by 0.21% for the third straight day to close at N1,462.59 per dollar in the official market.
However, the parallel market was in a see-saw as Naira depreciated by 0.34%, closing at an average of N1471 per greenback amidst expectation that the apex bank would resume FX auction at subsidized rate with cap on FX spread.
In the global commodity market, West Texas Intermediate crude futures fell to $78 per barrel while the Brent Crude decelerated to $82.02 per barrel on Wednesday, following a surprise rise in US crude stockpiles.
According to the EIA, US crude oil inventories rose by 1.825 million barrels last week, contrary to market expectations of a 2.55-million-barrel decline. The report also indicated a rise in distillate stockpiles, while gasoline stocks decreased less than expected.
In a note, Fitch said Nigeria’s external reserves would face a daunted pressures from the sovereign nation’s upcoming Eurobond repayment due in November, 2024. According to the repayment schedule, government is expected to settle $1.1 billion obligation from US dollar bonds issuance in November, 2025. Naira Exchange Rates Diverge on Tight FX Liquidity Naira Rises by 19% as Forex Market Pressures Ease
