Naira Rallies, FX Inflow Falls by 50% as CBN Halts Support
The naira appreciated against the US dollar by 0.50% in the official window, closing at ₦1,491.67 per dollar on Tuesday amidst a slowdown in intervention. The local currency appreciated as the Nigerian Foreign Exchange Market (NFEM) maintained stability; the exchange rate fluctuated between $/₦1,490.00 and $/₦1,503.00 in the official market.
The exchange rate steadied in the forex market despite the absence of the Central Bank of Nigeria (CBN) to boost liquidity in the currency market. The sustained rally suggests demand pressure has eased as data showed the FX inflow was down by half in the just concluded.
In a report, Coronation Research revealed that the Nigerian autonomous foreign exchange market recorded an inflow of US$977.40 million. The amount was more than 50% below US$1.96 billion inflows recorded in the prior week due to a lower contribution from the CBN.
Further details revealed that the CBN accounted for 8.28% of the total inflow reported amidst a momentarily pause in US dollar sales to banks last week. Foreign portfolio investors (FPIs) contributed 40.53%, non-bank corporates 30.77%, and exporters 15.90%, while other sources accounted for 4.52%.
Meanwhile, at the parallel market, the naira gained N5 to settle at an average of N1,500 per dollar as demand pressure eased slightly. Analysts anticipate a continued battle for stability in the forex market as the apex bank intensifies efforts to defend the naira.
With the CBN expected to take more decisive steps to support the local currency, including tightening liquidity and enhancing forex supply mechanisms, analysts believe the naira could gain further ground against the dollar.
Oil prices continued to decline after reports that OPEC+ plans to move forward with an output increase in April, while additional pressure came from U.S. tariffs on Canada, Mexico, and China, along with Beijing’s retaliatory measures.
Brent crude fell $1.04 (1.45%) to $70.58 per barrel, while WTI dropped 73 cents (1.07%) to $67.64. Meanwhile, gold prices climbed as a weaker dollar and escalating trade tensions fueled safe-haven demand. Spot gold rose 0.9% to $2,918.90 an ounce, with bullion up over 11% this year after hitting a record $2,956.15 on February 24. #Naira Rallies, FX Inflow Falls by 50% as CBN Halts Support Canada imposes retaliatory tariffs on U.S. imports
