Naira Lost N20.82 after Two Months Gaining Streaks
The naira declined against the US dollar by N20.82 after two months of gaining streaks. In December, the local currency appreciated by more than 8%. In January, the exchange rate also improved by more than 4%.
In Dec, exchange rates fluctuated between N1,500 and N1,693, with the naira closing at N1,535.82, appreciated by 8.18% in the NFEM window, investment firm AIICO Capital Limited said in its market note. In January, the local currency exchange rate improved by 4.3%, MarketForces Africa reported.
The two-month exchange rate rally in favour of the naira was influenced by aggressive FX sales to banks to enhance the amount of US dollar available to meet foreign payments. Other sources, including inflows from international oil companies, exporters FX receipts, and foreign portfolio investors’ inflows, boosted the market turnover.
The Nigerian naira has continued to enjoy stability in the foreign exchange market, trading between N1500 and N1700 on the back of sustained FX reform-propelled policies. However, the FX spot rate appreciated to settle below N1500 per greenback last week.
On Monday, the naira depreciated at the official market and traded at N1,495.60 to a US dollar amidst a fair amount of FX liquidity in the supply side. Data from the FMDQ Security Exchange official forex trading platform revealed that the naira lost N20.82.
This represents a 1.4 percent loss when compared to the previous trading day on Friday, Jan. 31, when the local currency closed trading at N1,474.78 to a dollar. The CBN reforms, which aimed at ensuring transparency in the foreign exchange (FX) market, has also boosted foreign investors’ confidence.
The apex bank’s reforms are also boosting the capacity of BDCs who are in the retail end of the FX market. The apex bank on Tuesday, Jan. 28, in Abuja, approved waivers on the 2025 annual license renewal fee for all existing BDC operators.
The bank also on Monday, Feb. 3, extended the deadline for sales of dollars to BDCs from Jan. 31 until May 30. Foreign reserves fell further, settling at $39.723 billion at the end of January following successive FX market interventions conducted by the CBN.
This is happening amidst pressures/uncertainties in the global commodities market. Record showed that oil prices decreased after initially rising by more than $1 earlier in the day. The price retreated as the United States and Mexico declared a temporary pause on tariffs that the U.S. had planned to impose on its neighbour.
President Donald Trump had set tariffs on Canada, Mexico, and China to take effect on Tuesday, raising alarms about possible supply disruptions. Currently, Brent crude traded around $75.49 per barrel, while West Texas Intermediate (WTI) was at about $72.49 per barrel.
In the precious metals sector, gold prices surged to a record high, fuelled by safe-haven investments as concerns about inflation, linked to Trump’s tariffs on Canada, China, and Mexico, grow, potentially affecting economic growth.
Gold is currently priced at about $2,821.62 per ounce. Analysts anticipate volatility to persist as tariffs on Canadian energy imports are likely to have a more significant impact on domestic energy markets compared to those on Mexican imports. This could ultimately undermine one of the president’s main goals of reducing energy costs. #Naira Lost N20.82 after 2-Month Gaining Streaks Naira Extends Rally as IOCs, FPIs, CBN Boost FX Liquidity
