Naira Appreciates by 13.51% as FX Reserves Rise
The naira appreciated by 13.51% to close at N895.23 to the US dollar at the Nigeria Autonomous Foreign Exchange Market (NAFEM), data tracked from the FMDQ OTC FX platform revealed.
The exchange rate had crossed above N1,035 midweek as a result of large FX logs that outpaced the total market supply. Nigeria’s gross external reserves climbed above $33 billion due to recent inflows.
The balance in the nation’s external reserves steadied below the amount as of the year’s end, though there have been additional FX receipts in the past weeks.
While the exchange rate improved at the official window, in the parallel market, the Naira depreciated by 1.23% day-on-day, closing at N1,230 per US dollar.
The central bank has maintained a distance from the forex market by allowing forces of demand and supply to determine the rate for FX users.
The decision which has lasted for 10 weeks now has seen the local currency rising above N1,000 but there has always been a noticeable recovery thereafter the massive depreciation in the official window.
In a note, multi-asset investment banking firm, CardinalStone Partners Limited revealed that the total FX supply by the CBN settled at $9.4 billion in 2023, the lowest since 2016.
“… We see legroom for improving FX liquidity in 2024, which could be instrumental in stimulating foreign inflows”, the firm added.
FX scarcity remains a major undoing in the Nigerian economy, a relatively import-dependent nation without an aggressive FX earnings strategy. Nigeria ranks higher in hydrocarbon sales but without a solid US dollar inflows record.
In the global commodity market, west Texas intermediate (WTI) crude futures advanced by 0.44% to $73.02 per barrel on Thursday. Also, the Brent Crude closed at $78.51 per barrel. #Naira Appreciates by 13.51% as FX Reserves Rise
