Naira Falls by 2.35% despite All Week FX Interventions
The naira lost 2.35% of its competitive strength against the US dollar and closed at N1603 in the forex market despite five straight days of FX intervention by the Central Bank of Nigeria (CBN).
The market still faced foreign currency liquidity crises that continued to reduce the value of the naira in the official window due to offshore demand for greenback.
The Central Bank of Nigeria intervened by selling $634.85 million across multiple sessions, which temporarily eased volatility. Despite these efforts, the Naira weakened by 2.346% w/w, closing at N1,603.78.
The NAFEX fixing mirrored this trend, fluctuating between N1,616.63 and N1,643.33, according to AIICO Capital Limited. The investment firm said in an update that trading activity was concentrated between N1,580 and N1,655, with the B-match platform recording highs of N1,665 and lows of N1,490.
At the close of trading session on Friday, Nigeria’s foreign reserves declined by about $102 million, settling at $38.03 billion
The local currency depreciated by N36.76 and N55.00 to close at N1,603.78 and N1,620.00 in the official and parallel markets, respectively. Consequently, the spread between the two markets widened to 1.01% from 0.13% the previous week.
In the forwards market, the naira rates decreased across contracts, reflecting expectations. One month FX forward contract depreciated by 3.0% to N1,670.42 on Friday, according to Cordros Capital Limited.
The investment banking firm reported that the 3-month FX forward contract fell by -3.6% to N1,752.18, while the 6-month contract declined by -5.2% to N1,870.78. Analysts also reported that the 1-year FX forward contract dipped by -7.5% to N2,087.66.
“The naira is likely to remain under pressure amid persistent global uncertainty, driven by the US tariff-induced trade tensions that continue to trigger capital outflows.
“Compounding this are foreign investors’ concerns over declining oil earnings, stemming from the slump in oil prices — a development that could lead to a trade deficit and a shortfall in the current account”, Cordros Capital Limited said.
Nevertheless, analysts said CBN’s sustained interventions are expected to cushion the naira from sharp depreciation in the near term. #Naira Falls by 2.35% despite All Week FX Interventions Afriland Properties Records N2.6bn Profit for 2024
