Naira Rises to N1630 as FX Reserves Hit $39.66bn
The naira strengthened against the US dollar in the official foreign exchange (FX) market as the gross balance in Nigeria’s foreign reserves rose to $39.66 billion. The naira appreciated by 2.41%, closing at ₦1,630.45 per US dollar at the official market, spot data from the FMDQ platform confirmed.
The market wide rally experience resulted N5 gain in the informal currency market. Channel check showed that the naira US dollar was exchanged at ₦1,725 in the parallel market today, from N1,730 at the beginning of the week.
At the current level, exchange rates gap has narrowed to N95, though this is noted to be high in a country that has continued to seek converge and curb speculative traders.
In the third quarter of the year, the naira depreciated by 2.4%, dropping from N1505.30 to N1541.52 due to a sustained FX liquidity shortfall in the currency markets. In its FX projection for the fourth quarter of 2024, FSDH analysts said they expect the exchange rate to close the year around N1,560/US$.
“With the festive season approaching and added pressure in the FX market, we anticipate an increase in Forex inflows, driven by hikes in policy rates and increased FX interventions by the CBN, aimed at maintaining a stable exchange rate,” FSDH said in its macro report.
The exchange rate devaluation and interest rate hikes have inflated the Naira value of public debt instruments. However, it has also boosted federal allocations to states, leaving some companies in a near-distress situation.
Global oil prices declined by almost 1% in a single day, following their most significant daily drop in two years. Brent crude fell to $71.20, while US benchmark West Texas Intermediate (WTI) was down to $67.23 on Tuesday.
In contrast, gold prices surged to a record high, driven by uncertainties related to the U.S. presidential election and the Middle East conflict, as well as anticipations of an interest rate cut from the Federal Reserve. This enhanced the appeal of bullion, which traded at approximately $2,781.60 per ounce. #Naira Rises to N1630 as FX Reserves Hit $39.66bn
