Naira Advances Against USD, FX Reserves Drop Again
The naira advanced against the US dollar (USD) at the official window on Tuesday, according to daily FX data published by the Central Bank, reflecting the absence of pressures in the currency market.
The spot rate appreciated by 0.42% to ₦1,382.63/$ at the Nigerian foreign exchange market (NFEM), as foreign portfolio investors and non-bank corporate FX flows strengthened supply.
In the parallel market, the naira dropped to ₦1,400, reflecting divergent currency dynamics between the official and informal foreign exchange segments.
Recording six consecutive outflows, Nigeria’s gross external reserves fell further to $49.606 billion amid the global energy crisis, which analysts rated as revenue positive for oil-producing countries.
Oil prices rebounded as Iran struck Israel fast and aggressively, while Tehran denied possible diplomatic talks with the United States. The official statement released by Iran came in contrast with US President Donald Trump’s statement, a development Iran tagged as fake news.
The United States has sent Iran a plan for ending the war in the Middle East, according to two officials briefed on the diplomacy, reflecting the Trump administration’s desire to find an offramp to a conflict that has deeply rattled the global economy.
It was unclear whether Iran was likely to accept the plan, sent via Pakistan, as a basis for negotiations, or whether Israel, which has been bombing Iran together with the United States for four weeks, was on board with it.
The US backed away from the ultimatum issued over the weekend and cited talks that the Iranian leaders denied took place. The markets remain on edge. President Trump’s five-day hiatus announced yesterday is looked upon suspiciously.
Much of what has been claimed seems to be part of the psych-operations associated with warfare, like initiating the war during negotiations. Many seem to share the analysts’ sense that the five-day period will allow more US troops to enter the region and perhaps attempt to take Kharg Island.
The euro traded on both sides of the pre-weekend range, traded above the 20-day moving average since the war on Iran began, and settled at its highest level since March 4.
The euro retraced a little more than half of this month’s losses. There has been no follow-through buying today, despite the constructive price action. Amid the consolidative tone, the euro found support near $1.1575. Bondholders Maintain Hold on Naira Assets, Yield Steady
