Naira Falls to N1,667 as CBN Keeps FX Market Actors Guessing
The naira fell by 54 basis points to N1,667 against the US dollar midweek as the foreign exchange (FX) market crisis deepened. The value of the local currency fell despite strong FX inflows into external reserves.
Despite rising external reserves, the Central Bank of Nigeria (CBN) has continued to keep the market guessing about its next forex market intervention, covering both official and informal currency segments.
Nigeria’s external reserves surged to $37.708 billion this week, up from $37.471 billion on Friday, data from the Central Bank revealed. US dollar inflow into the Nigerian economy has been strong but often greeted by increased demand for foreign payment amidst the apex bank’s unwillingness to defend the naira.
Despite the resumption of retail Dutch FX auctions early in August, the CBN has refused to conduct another auction sale 47 days later. Analysts said the authority may continue to keep the market guessing about the next move to boost FX liquidity in the currency market.
The Apex Bank recently sold US dollars to authorised dealer banks to raise the forex market liquidity balance, its first reaction to the wobbling exchange rate after $900 million in domestic US dollar bonds.
On Wednesday, the FX market was heated up by increased demand for foreign currencies, notably, US dollar, which has become dominant in import payments. According to FX spot data from the FMDQ, the exchange rate worsened by 0.54%, with the naira closing at ₦1,667.42 per US dollar at the official market.
In the parallel market, the naira fell from N1,660 to close the trading session at ₦1,675 to the US dollar as demand for invisible FX payments continues to increase. Elsewhere, oil prices experienced a decline of over 1% as investors re-evaluated whether China’s recent stimulus measures would effectively boost its economy and increase fuel demand as the largest importer of crude in the global commodities market.
At the time of reporting, Brent prices dropped by 2.26% to $73.49, while WTI prices rose by 2.56% to $69.71. Conversely, gold surged to a new high due to expectations of another substantial interest rate cut by the U.S. Federal Reserve. Currently, gold is showing an increase of 0.81% at $2,677.60 per ounce. #Naira Falls to N1,667 as CBN Keeps FX Market Actors Guessing CBN Defends Naira with $39m in Forex Market
