Naira Sees Strong Gain as Nigeria Receives Huge FX Inflow
The naira experienced sharp daily appreciation of about 5% in the foreign currency market on Wednesday after data showed a lump sum boosted the gross balance in Nigeria’s external reserves.
In the Nigerian autonomous foreign exchange market, the naira appreciated by 4.81% to close the trading session at the exchange rate of ₦1,558.75 per US dollar. The local currency appreciated following a record inflow of $250 million into gross external reserves on Monday.
Analysts are of the view that Nigeria would requires strong FX liquidity to recalibrate exchange rate direction. The local currency has suffered from lack of US dollar inflow and surging demand.
This has made it difficult for the naira to keep gain. Since April, exchange rates across FX markets have been wobbling in the absence of significant FX liquidity drive in the currency market.
According to a review of movement in foreign reserves, the gross external reserves balance increased to $36.642 billion at the beginning of the week from $36.692 billion at the end of the previous week.
Some analysts said Nigeria expects inflows from recently completed domestic US dollar sales of $900 million. The debt office raised more than $500 million initial plan from domestic US dollar bonds offered to retails investors.
The naira closed at ₦1,645 to the US dollar in the parallel market, despite FX sales to currency traders at the informal FX segment. In the global commodity market, oil prices trended higher on Wednesday, with Brent Crude at $70.31 per barrel and WTI at $67.09 per barrel.
The local currency remained under pressure due to an intermittent back up from the central bank that weakened the supply side. #Naira Sees Strong Gain as Nigeria Receives Huge FX Inflow Liquidity: Banks Drive Yield Surge with T-Bills Selloffs
