Naira Rises against EUR, USD as GBP Rally—CBN FX Data
The Nigerian local currency, the naira, depreciated against the Great Britain pound (GBP) and South African rand (ZAR) in the official foreign exchange market, according to data obtained from the Central Bank.
The British pound, or sterling, ended the week at N2,120 as payment obligations to trading partners in the United Kingdom increased from N2,106 spot rate at the beginning of the week.
Meanwhile, demand for the euro (EUR) moderated versus the volume of foreign currency supplied as government trade relations and corporate business activities with partners in the European markets closed favourably.
As the forex market mechanism continues to allocate currencies based on demand and supply, the naira strengthened against the euro, closing at N1817.68 versus the spot rate of N1829.43 at the beginning of the trading week.
The spot FX rate for the pair fluctuated all week in the currency market amidst shifts in global trading activities. The naira rallied against the euro despite the fact that the European currency has been gaining strength against the US dollar in the global market.
The official exchange rates trend revealed the fact that most foreign payments are conducted in US dollars (USD), the dominant currency in a local market.
Against the South African Rand, the naira lost to close at N85.19 in the official market, from N83.71 at the beginning of the week. FX market participants increased demand for payment in South African rand caused rate repricing on the CBN official window.
Over the week, the Nigerian local currency appreciated against the Japanese yen to close at N11.25, according to data from the CBN, from N11.27 in the prior week.
The naira was priced at N1599.93 in the official FX market at the close of the trading session on Thursday, a moderate rise against the US dollar, which was quoted at N1603.78 last week.
There has been a shift in the global forex market recently, with traders selling dollars on the expectation that the DXY index would remain under pressure. The U.S. dollar declined by 4.0% in the first quarter, marking its worst start to a year since 2008, according to CardinalStone Partners Limited. Some market watchers considered this weakness a deliberate move by the U.S. to address its high trade deficit.
However, with limited data to support this claim, analysts attribute the dollar’s decline to a slowing growth narrative, which has triggered broad sell-offs in traditional assets and a gradual capital rotation to other regions, particularly Europe. #Naira Rises against EUR, USD as GBP Rally—CBN FX Data CUTIX Gains 30% on Earnings Forecasts, Unusual Trade Volume
