Naira Depreciates as Interbank FX Turnover Tumbles 78%
The Nigerian naira fell against the US dollar as US dollar liquidity declined amidst growing demand for international payments and non-bank corporate requisitions.
FX traders said the sovereign unit depreciated against the crosses as elevated US Treasury yields and rising oil prices put pressure on emerging market currencies.
The Nigerian naira dropped to N1,331 per US dollar as data showed that financial institutions’ activities at the interbank window declined sharply.
Daily FX data released by the Central Bank of Nigeria (CBN) showed that the official exchange rate closed at N1331.3292 per dollar, up from N1329.5138 the previous week’s close.
Transactions at the official window were executed between N1330 and N1332, suggesting that moderate US dollar demand pressure clouded the local currency’s strength.
The CBN daily FX report revealed that interbank FX turnover moderated sharply on Monday as trade volumes among banks and other financial institutions slowed.
NFEM Interbank turnover dropped by about 78% to $24.731 million, from $111.064 million on Friday. The number of deals executed at the interbank window fell to 37 from 108.
In the global commodity market, crude oil prices edged higher after US President Donald Trump rejected Iran’s truce offer to reopen the Strait of Hormuz within seven days.
Brent crude, the international benchmark, rose more than 3 per cent on Monday, nearing $108 a barrel. The latest market volatility comes after Trump said on Saturday Tehran’s latest proposal for ending the US-Israel war on Iran was not acceptable.
Under Tehran’s proposal announced at the United Nations General Assembly on Friday, the US would release frozen Iranian funds, lift sanctions and end its naval blockade on Iranian ports in exchange for Iran reopening the strait and returning to negotiations on its nuclear programme within a week.
Before the US and Israel launched strikes on Iran in late February, approximately one-fifth of global oil supplies flowed through the Strait of Hormuz, which links the Gulf to the Gulf of Oman and the Arabian Sea.
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