Naira Gains 5.4% as FX Crisis Eased, Market Expects FX Sales
The Naira rallied strongly against the US dollar in the foreign exchange (FX) market at the beginning of the week after negative outing in the recent past week.
Spot FX data from the FMDQ platform showed that the local currency appreciated by 5.38%, closing at ₦1,552.92 per US dollar at the official market.
US dollar demand pressures eased at the beginning of the week following $50 million FX auction sales to local banks last week. The Apex Bank has continued to back the naira to reduce volatility in the forex market.
Despite the authority’s effort to keep the exchange volatility in check, the naira has been under pressures across forex markets.
According to channel check, exchange rate at the informal currency market worsened at the beginning of the week due to seasonal demand for the greenback.
The October effects in the currency market started taking shape, and this caused informal sector FX demand to stay uptrend. Analysts believe that Nigeria’s latest open window for food imports contributed to depressed exchange rate in the informal currency market.
Today, the naira closed at ₦1,680 to the US dollar amidst plan to feed more than 230 million Nigerians with imported foods to reduce pressure in the markets.
In a move to combat soaring food prices and alleviate the burden of inflation on Nigerians, the Federal Government proposed a temporary zero-duty levy on selected food imports.
The Central Bank of Nigeria released $689.88 million or N903.95 billion at the official exchange rate of N1,309 as of March 31, 2024 to Nigerians for importing food items in the first quarter of 2024.
The market anticipates that the CBN will continue to sell US dollar to authorised dealer banks to boost FX liquidity level in the official currency market.
In the global commodities market, oil prices fell, with Brent Crude decreasing by 2.36% to $77.2 per barrel, while WTI also dropped by 2.45%, closing at $73.7 per barrel. #Naira Gains 5.4% as FX Crisis Eased, Market Expects FX Sales
