FX Spread Narrows as Naira Falls Across Official, Parallel Markets
The FX spread, or the gap between official and unofficial exchange rates, narrowed as the naira traded negatively across currency markets. The Nigerian foreign exchange market suffered US dollar scarcity last week, a development that forced the Central Bank intervention.
The Apex Bank injected $250 million to strengthen FX supply and redirect the naira exchange rate at the official window, but the local currency had been cut too deep. The naira closed at N1454 per dollar at the official window as demand for US dollars surged amidst a slowdown in FX inflows.
At the official window, the naira hit an intraday high of N1462 on Friday versus N1450 per dollar at the beginning of the trading week, signalling a strong liquidity shortage.
Exchange rate worsened by N14 per dollar week on week at the official market as demand surpassed the total dollar volume supplied, including FX sales by the CBN.
In the parallel market, the naira lost N5 to close the week at N1460 amidst an imbalance between US dollar demand and supply. The gap between the official and parallel markets now closed at N6 as the authority continues to keep tabs on speculative tendencies.
Despite the exchange rate volatility, Nigeria’s external buffers improved modestly. Nigeria’s gross foreign reserves rose by 1.10% week-on-week, climbing to $44.12 billion from $43.64 billion.
The accretion was supported by stable oil receipts, stronger non-oil inflows, and a sustained trade surplus — all of which reinforced the Central Bank’s ongoing efforts to maintain a firmer macro-liquidity backdrop and support overall market stability.
In the commodities space, oil prices retreated sharply mid-week following data showing an unexpected build up in U.S. crude inventories. The development heightened concerns around global oversupply and tepid demand growth.
West Texas Intermediate (WTI) crude declined by 3.01% to $58.91 per barrel, Brent lost 2.91% to settle at $63.00, while Nigeria’s Bonny Light slid 1.24% to $64.28.
The bearish shift across major benchmarks reflects the market’s renewed sensitivity to supply-side risks, amplifying downside pressures on producer economies. Dangote Cement Plunges as Investors Trim Shareholding
