Naira Struggles to Keep Value as FX Pressures Mount
The naira depreciated against the US dollar in the official market due to insufficient FX liquidity to meet foreign currency demand. The local currency has been struggling to keep value amidst increasing demand for a preferred foreign currency, the US dollar.
On the positive side, exchange rates appreciated in the electronic FX platform and parallel market. According to information from the FMDQ platform, the naira fell by 0.65%, closing at N1,550 per US dollar in the official market as the market awaits another round of intervention.
Last week, exchange rates worsened across FX markets despite FX interventions. The Central Bank of Nigeria (CBN) sold $124.6 million to banks to boost liquidity balance in the forex market.
Transactions were consummated between N1,520 and N1,555 per greenback at the Nigerian autonomous foreign exchange market on Monday. Spot rate eventually closed at N1550/$.
Meanwhile, traders reported that the naira appreciated by 0.2% to N1,546 versus the US dollar in the Electronic Foreign Exchange Matching System (EFEMS). The sustained rally has been supported by sizeable FX liquidity and transparency.
In the parallel market, the exchange rate improved as import payment requests eased ahead of the Christmas celebration. FX remittance from Nigerians in diaspora continues to alleviate demand pressure in the informal currency market.
The naira settled at N1600 in the parallel market on Monday, appreciated by N30 on each US dollar from N1630, according to a channel check.
Today, oil futures declined in the global commodities market from their peak levels in recent past weeks, influenced by a downturn in consumer spending in China, the largest oil importer globally. Brent crude was priced at approximately $74.14 per barrel, while WTI hovered around $70.94.
In contrast, spot gold prices rose, bolstered by persistent geopolitical tensions and falling U.S. Treasury yields, as markets anticipated the Federal Reserve’s policy meeting, where a third rate cut and insights on the 2025 outlook are anticipated.
Data also showed that gold was trading at about $2,655.39 per ounce amidst a rush to a safe haven. #Naira Struggles to Keep Value as FX Pressures Mount Bitcoin Hits $106,000 as Investors Raise Stakes
