Exchange Rates Diverge as FX Supply Sinks 3.5%
The naira exchange rates diverged across the foreign exchange markets as US dollar scarcity persisted in Nigeria. At Nigeria’s autonomous foreign exchange market, the naira regained value but the parallel market rate worsened.
The negative movement in the exchange rate at the official window occurred despite accretion into foreign reserves. But, foreign currency supply into the autonomous forex market declined week on week as the Central Bank of Nigeria (CBN) halted weekly supply.
Data from the FMDQ platform revealed that the Naira appreciated by 1.02% to close at N891.90 to the US dollar at the official market. In the parallel market, the Naira closed at N1,405 per greenback as the volume of foreign currency available could not meet invisible demand.
On the domestic front, Nigeria’s foreign reserves gained 0.2% to $33.4 billion amidst recovery in the global commodities market.>>>Selloffs Provoke Spike in Nigerian Treasury Bills Yield
Brent futures strengthened by 4.6% to trade at $82.41 per barrel on Friday, buoyed by China’s 1.0 trillion yuan or $139.8 billion stimulus plan and disruptions to US production owing to cold weather, even as the Middle-east and Red Sea conflicts linger.
Meanwhile, the volume of US dollars traded in the official market fell 3.5% in the just concluded week as turnover closed at $488.2 million. Analysts at Afrinvest Limited expect the naira to remain pressured across FX segments due to CBN’s constrained capacity to significantly boost supply.
Investment banking firms have become largely naira bears, predicting that the exchange rate will cross N1,000 in 2024 due to forex supply shortage. #Exchange Rates Diverge as FX Supply Sinks 3.5% Naira Rises by 19% as Forex Market Pressures Ease
