Daily FX Update: Naira Depreciates as FX Liquidity Tightens
Daily FX Update: The naira depreciated against the US dollar at the Nigeria Foreign Exchange Market (NFEM) as international payments eclipsed aggregate FX liquidity at the official currency market.
Daily FX data released by the Central Bank of Nigeria (CBN) on Monday showed that the official spot rate depreciated to N1,333.7200 per US dollar, from an opening rate of N1,332.2582 at the previous close.
The exchange rates hovered between N1,332.5000 and N1,334.5000 during the intraday trading session amidst shifting forex market liquidity.
Today, financial institutions’ activity at the interbank FX window declined sharply, the same pattern observed by market analysts in the first trading session of every new week.
The CBN data revealed that interbank FX turnover fell by more than 84% to $40.597 million, from $258.462 million reported at Friday’s close. Intermarket activity slowed, with the number of deals reduced from 135 to 59.
Last week, the Naira depreciated 0.08% week-on-week to close at N1,332.26 per US$1 on Friday, up from N1,331.19 the previous week.
The NFEM rate held within a narrow N1,331.61–N1,332.97/US$1 range across the week’s five sessions, with its weakest level of N1,332.97/US$1 recorded on Tuesday.
NFEM turnover peaked at US$1.016 billion on Wednesday and stood at US$577 million on Thursday. In the parallel market, the Naira weakened to approximately N1,380, up from N1,375.
Consequently, the premium of the parallel-market rate over the NFEM rate widened to N47.74/US$1, from N43.81/US$1 in the prior week, increasing the spread from 3.3% to 3.6%.
This is the second consecutive week of widening, suggesting stronger demand for cash dollars outside the official window. Nigeria’s gross external reserves rose marginally to US$55.1 billion from US$55.07 billion the previous week, keeping the external buffer close to an 18-year high.
The pace of accretion has slowed sharply, with weekly gains easing from US$480 million to US$140 million, US$120 million, and US$20 million over the past four weeks. Coronation Research said. Nigerian Naira Softens Against US Dollar, Euro, British Pound
