CBN FX Rate Dips Amidst Rising Foreign Reserves
The Central Bank of Nigeria (CBN) spot fx rate depreciated slightly against the dollar amidst rising external reserves. FX data update released by the Apex Bank showed that the exchange rate dipped slightly to N1533.74 at the official window on Friday, from N1533.55 the previous day.
The exchange rate touched an intraday high of N1535.55 in the forex market, which happened to be the closing rate for the day, reflecting the absence of significant pressure from the demand side.
In the parallel market, the local currency appreciated 32 bps to print at N1,540 per dollar. Exchange rate stability has persisted in the second half of the year, supported by supply from foreign portfolio investors (FPIs) looking to participate in the CBN open market operations.
According to data from the CBN, the gross external reserves increased for the fourth consecutive week, growing by USD593.75 million over a week to close at USD39.36 billion. “We maintain our optimism on the naira as FX liquidity is poised to remain robust,” Cordros Capital Limited said in a note.
Analysts said elevated yields, particularly in the OMO bills market, as well as a weaker dollar, are expected to continue to drive FX inflows from foreign portfolio investors to the FX market in the near term.
“We also believe the stronger market confidence and low incentives for naira speculation will continue to contribute to robust inflows from local sources.”
Global oil fell as investors weighed the supply risks from President Trump’s push for a swift resolution to the war in Ukraine through more tariffs, while a surprise build in U.S. crude stocks also weighed on prices.
Brent crude shed 79 cents to $71.68 per barrel, while U.S. West Texas Intermediate depreciated by 82 cents to $69.18. However, gold rose 1% as traders turned to the safe-haven asset amid ongoing tariff uncertainty as President Trump’s August 1 deadline to end negotiations approaches.
Spot gold gained by 0.65% to $3,295.79 per ounce, while U.S. gold futures closed 0.38% higher at $3,348.52. Outlook: Commodity prices will trade at the same direction as investors focus on the U.S. tariff implementation. #CBN Spot FX Rate Dips Amidst Rising Foreign Reserves
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