FX Spread Surges as Naira Depreciates Across FX Markets
The gap between the official and parallel market exchange rates, or FX spread, widened to N45 per US dollar as the naira experienced a market-wide depreciation on Thursday.
According to the Central Bank of Nigeria (CBN) daily FX publication, the local currency fell to N1,363.3040 against the dollar in the official window, down from N1,360.0725 the previous day.
Transactions in the Nigerian foreign exchange market (NFEM) were consummated between N1,361 and N1,366 during the day, indicating significant tightness in FX liquidity.
The official market’s FX liquidity has been facing pressure over the last three trading sessions, contributing to a decline in the official exchange rate due to rising demand for foreign payments.
Some analysts attribute the market liquidity dynamics to the lack of substantial Open Market Operation (OMO) bill positioning by foreign portfolio investors, who are key sources of hard currency inflows for the Apex Bank.
The CBN’s daily FX report revealed that interbank FX turnover increased to $69.918 million across 85 interbank transactions, up from $54.293 million the previous day.
The local currency weakened against the US dollar, driven by significant FX settlements that outpaced liquidity improvements at the NFEM window.
In the parallel market, the naira also depreciated, reflecting strong demand for foreign transactions in a naira-dominated local economy.
The informal market exchange rate closed at N1,405 per dollar, up from N1,396 the previous day, according to Meristem Securities Limited.
As a result, the market spread widened to N44.93/USD from N38.82/USD previously. In the past 24 hours, Nigeria’s gross external reserves increased to $50.962 billion, up from $50.886 billion.
Naira Appreciates to N1,356 as Foreign Reserves Reach 2009 High
