Naira Stabilises Around N1600, FX Spread Sinks to N10
The naira exchange rate gravitated around N1600 in the foreign exchange market as the central bank continued to monitors forex market dynamics with the intention to protect the local currency.
Exchange rate volatility reduced in the week, thanks to the CBN’s sustained FX intervention sales to local banks and two times OMO bill auctions at a higher rate to attract foreign investors.
This kept the rate stable, underpinned by healthy liquidity levels and a moderate increase in foreign exchange demand, analysts at AIICO Capital Limited said.
The US dollar – naira pair traded within a range of N1,580 to N1,603.50 during the session. By the close of trading, the Naira appreciated by 19 bps to settle at N1,596.68
The exchange rate closed at N1601 in the parallel market as demand and supply leveled up. The spot FX data showed that gap between official and parallel market rates dropped to N10 per dollar. Analysts said CBN’s persistent interventions will likely keep the naira confined to its present trading band over the short-to-medium term.
In a surprise turn of an event, the external reserves climbed after successive outflows that plunged the gross balance below $38 billion amidst fluctuating oil prices—its lowest level seen in the last six months.
Oil prices declined on Wednesday, heading for their steepest monthly loss in over three years, as Saudi Arabia indicated plans to boost production and regain market share.
Concerns over slowing global fuel demand due to the ongoing trade war also pressured prices. Brent crude dropped $1.16, or 1.81%, to $63.09 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.38, or 3.94%, to $58.04.
Meanwhile, gold prices trimmed earlier losses after disappointing U.S. growth data strengthened expectations of a Federal Reserve rate cut. Spot gold dipped 0.2% to $3,308.32 an ounce but remained poised for its fourth monthly gain, up nearly 6% for April.
Analysts expect OPEC+’s potential supply increases, combined with possible crude exports from Iran and Ukraine, could flood markets amid trade war-driven demand weakness. #Naira Stabilises Around N1600, FX Spread Sinks to N10#
