FX Inflow Plunges by 76% to $1.04bn in Currency Market
Inflow into Nigeria’s foreign exchange (fx) market plunged sharply, down by approximately 76.5% week on week to $1.04 billion, as data showed a drain in other US dollar sources.
Despite the slowdown in US dollar volume, which had printed at $4.42 billion in the previous week, the naira remained relatively strong while external reserves reduced on the back of pressure from FX interventions.
To fill the gap, the Central Bank of Nigeria (CBN) stepped up its FX market intervention sales, where it offered $170 million to banks to keep the supply side strong. But the external reserves reduced amidst scarcity of US dollar inflows.
In its report, the research arm of Coronation Merchant Bank revealed the FX window recorded an inflow of US$1.04 billion last week compared to US$4.42bn in the previous week.
Analysts said exporters accounted for 18.33% of the total inflows. Also, CBN contributed 19.71% of the US dollar volume.
Amidst successful open market operations (OMO) bills auctions, foreign portfolio investors (FPIs) supplied 32.02% of the FX inflows, and non-bank corporates did 29.49%, while other sources accounted for 0.45%.
The gross foreign reserves decreased by 0.24% w/w to close at US$38.46 billion, though the exchange rate remained relatively stable. Turning to the Chinese Yuan, the Naira lost 0.14% against the Chinese Yuan (CNY), to close at N220.26CNY/N. on Friday.
Oil prices surged nearly 3% on Monday despite OPEC+ maintaining its planned output increases, as wildfires in Canada’s oil region raised supply concerns and President Trump’s new tariff threats pressured the U.S. dollar.
Brent crude rose by $1.85, or 2.95%, to settle at $64.63 per barrel, while U.S. West Texas Intermediate (WTI) crude increased $1.73, or 2.85%, to $62.52. Meanwhile, gold prices jumped over 2%, reaching a three-week high, driven by a weaker dollar, geopolitical tensions, and economic uncertainty.
Spot gold climbed 2.5% to $3,372.13 an ounce, its highest since May 8 earlier in the session. Analysts said tight physical markets, robust activity data, and seasonal demand factors indicate any demand slowdown will likely be too moderate to halt production hikes in the upcoming August output decision. Benchmark Yield on Nigeria’s Bonds Falls in Post-Auction Rally
