Naira Stays Positive as Investors Liquidate Dollar Positions
The Nigerian local currency, the naira, extended its gains against the dollar, appreciating 0.29% to ₦1,476.35 at Nigeria foreign exchange market on Monday.
FX rate sustained its rally against the US dollar across the local currency market, reflecting improved sentiment. Demand for the US dollar was subdued amidst export and oil companies’ inflows.
To avoid fluctuation risks, MarketForces Africa gathered that some investors with short-term structured dollar assets have begun to wind down positions.
Broadstreet analysts hinted that some risk-averse investors that have locked down funds in dollar denominations have started to sell down amidst fear that the naira gain will erode their portfolio strength.
“Most of the dollar funds that were to cater for short-term positions have been wound down,” a close source in one of the top investment banking firms said in a chat.
Their decisions are anchored on anticipated sustained positive exchange rate movements amidst growing US dollar supply, and accretion into external reserves.
At the official window, the local currency appreciated in the absence of significant demand for foreign currency with already bolstered FX liquidity in the official window.
Updated FX from the Central Bank of Nigeria (CBN) showed that spot fx rate touched intraday low of N1475 per dollar, and highest rate for today was quoted at N1,486.50
FX traders expressed confidence about the naira’s outlook, with gross external reserves climbing to $42.256 billion on Friday from $42.225 billion the previous day.
In the parallel market, the naira appreciated by 0.83% to ₦1,499, demonstrating continued strong demand for the local currency across both segments. #Naira Stays Positive as Investors Liquidate Dollar Positions Brent Nears $69 as Geopolitical Tensions Fuel Supply Risks
