Naira Gains as Inflows from IOCs, Exporters Boost FX Liquidity
The naira gained against the US dollar at the Nigerian Foreign Exchange Market (NFEM) as inflows from across key sources boost the supply side amidst rising foreign reserves. The exchange rate has been stabilised, reflecting corporate and foreign investors’ confidence about the Nigeria forex market.
U.S dollar turnover has been supported by FX inflows from foreign portfolio investors taking bets on Nigerian OMO bills in addition to exporters’ contributions and the latest round of foreign currency streams from international oil companies (IOCs).
FX update from the Central Bank of Nigeria (CBN): the official rate closed at N1534.52 per dollar in the absence of significant demand pressures despite a slowdown in intervention support.
Transactions were consummated at the official rate ranging between ₦1,533.50 (intraday low) and ₦1,535.50 (intraday high). The local currency appreciated by 10 bps to close at ₦1,534.00 per dollar.
CBN updated data also highlighted Nigeria’s gross foreign reserves increased to $40.654 billion, up by approximately $70 million from the previous session. Analysts anticipate rate moderation around a similar level amidst growing external reserves.
Global oil prices rose, after US President Donald Trump warned of “severe consequences” if his talks with Russian President Putin on Ukraine fail and on expectations that a U.S. interest rate cut next month could spur oil demand.
Brent crude spiked 131cents to $66.94 per barrel, while U.S. West Texas Intermediate appreciated by 134 cents to $63.99.However, gold fell as hotter-than-expected U.S. inflation data and a drop in jobless claims lifted the dollar and Treasury yields, trimming the odds of a supersized September rate cut.
Spot gold dipped by 0.53% to $3,338.62 per ounce, while U.S. gold futures closed $26.82 lower at $3,385.10. Commodities prices may trade mixed tomorrow, with oil supported by geopolitical risks and Fed rate-cut expectations, while gold remains pressured by strong U.S. inflation and a firmer dollar unless softer CPI data prompts a rebound. Interbank Rates Cross 32% as Banks Ramp Up Borrowings
