Naira, External Reserves Climb as Bonny Light Hits $81
The naira exchange rate appreciated against the US dollar in the forex market as data from the Central Bank of Nigeria (CBN) showed Bonny Light crude oil price climbed to $81 per barrel last week.
The local currency has remained stable as the US dollar continues to lose its strength against major trading pairs in the global forex market.
The dollar index held steady at 97.2 on Friday, hovering near its lowest level since February 2022, after a four-day slide in which the greenback lost around 1.5%, driven by mounting expectations of Fed rate cuts.
According to data obtain from the CBN, the naira appreciated against the dollar by about N8 week-to-date, trading at N1539.23/$ from N1547.42/$ at the end of the previous week.
In the parallel market, the naira closed at N1565 per dollar. Hence, the official-parallel market gap decreased to about N26 from N33 in the previous week. Foreign reserves ended the week at $37.37 billion, increasing by about 0.78% from the previous week’s close of $37.66 billion following fresh inflows.
Crude oil prices posted a weekly loss, weighed down by easing geopolitical tensions in the Middle East, which have reduced fears of supply disruptions. Despite U.S. inventory draws, market sentiment remains cautious, shaped by upcoming OPEC+ decisions, global ceasefire talks, and tariff speculation. Brent crude fell to around $68 per barrel, while WTI hovered just above $65, both down significantly from last week’s highs.
Nigeria’s Bonny Light showed resilience, inching to $81 per barrel, according to CBN data. Meanwhile, the naira strengthened across both the official and parallel markets, appreciating to N1,539/$ and N1,565/$, respectively, supported by improving market sentiment and FX inflows.
According to the data from the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), total transactions in the local bourse surged by 45.3% to N700.50 billion in May from N482.04 billion in the previous month.
The performance was driven by the higher participation from both domestic and foreign investors. Analysing the breakdown, domestic investors’ inflows increased by 38.8% m/m to N581.59 billion, driven by a rise in transactions from retail investors and institutional investors.
At the same time, foreign investor inflows rebounded after a month of decline, rising by 88.5% m/m to N118.91 billion from N63.07 billion in April, partly supported by moderating fixed income yields and improved market sentiment, which boosted foreign investors’ demand in the equities market.
Net flows declined by 54.0% to N2.64 billion in May from N5.74 billion in April, driven by strong net foreign inflows of N13.31 billion that outweighed net domestic outflows of N10.67 billion.
“In the near term, we expect domestic investors to remain the primary drivers of transaction value, supported by an anticipated decline in fixed income yields, which is expected to sustain buying interest”, analysts at Cordros Capital Limited said in a commentary note.
Analysts maintained that the relative stability of the naira is likely to encourage increased participation from foreign investors in the equities market; however, prevailing global uncertainties present a downside risk to sustained inflows.
#Naira, External Reserves Climb as Bonny Light Hits $81 New Tax Reform Bills: A New Dawn for Nigeria’s Economy and Citizens
