FX Gap Narrows to N21 as Naira Reclaims Value
Due to a relatively improved US dollar supply, the pressures on Naira eased moderately at the official foreign exchange window after a large slump at the beginning of the week. The exchange rate at the Nigeria autonomous foreign exchange market appreciated 2.30% day on day to settle below N1500 after crossing the red line on Monday.
FMDQ platform revealed that the spot rate settled at N1,499.07 per US dollar from N1,534.39 the previous day. In the parallel market, the Naira closed at N1,520 against the US dollar. The exchange rate appreciation at the official window has narrowed the gap between official and parallel market rates to N21.
In an update, Agusto Ratings said at the core of Nigeria’s currency conundrum is an external imbalance problem that underpins an FX illiquidity challenge. This has been exacerbated by the distortionary impact of hoarding, stockpiling, and panic buying.
The CBN’s efforts at improving transparency in the FX market in addition to the near convergence of the official and parallel market exchange rates raise the potential for a recovery of the naira if and when the backlog is cleared, the rating firm added.
Nigeria’s foreign reserves however at $33.3 despite increased oil output. Nigeria’s oil output rose month-on-month to 1.43 million barrels per day, bpd in January 2024, from 1.34 million bpd recorded in December 2023. Naira Steadies as Banks Issue Update on FX Purchase
This translates to an increase of 6.9 per cent as federal government continue to invest in the nation’s oil assets. On yearly comparison, output rose by 15.6 per cent to 1.43 million bpd in January 2024, from 1.23 million bpd recorded in the corresponding period of 2023.
The output excludes condensate, a light crude, which Nigeria can produce between 300,000 bpd and 400,000 bpd, according to the Monthly Oil Market Reports, MOMRs of the Organisation of Petroleum Exporting Countries, OPEC.
In the global commodity market, WTI crude futures advanced by 0.56% to $77.35 per barrel on Tuesday. Also, the Brent Crude increased by 0.29% to close at $82.24 per barrel. #FX Gap Narrows to N21 as Naira Reclaims Value
